The China-India Conflict (V. India: A Peculiar Semi-Colony in the Role of a Regional Power)




When we compare India with China, we can see clear differences between the two. While both countries are similar in terms of population, they are significantly different in their economic development. Based on figures published by the late Angus Maddison, the renowned economic historian, Table 3 demonstrates that while both countries experienced stagnation and decline in the period of colonialist aggression, China managed to more than quadruple its output per head in the period of post-capitalist planning (1950-1990) and doubled it between 1990 and 2001. In comparison, India "only" doubled its output per head between 1950 and 1990 and increased it by less than 50% between 1990 and 2001.




Table 3: GDP per capita (international dollars, 1990), China and India, 1820-2001 [1]


                                               Gross Domestic Product Per Capita (International Dollars, 1990)


                               1820                      1870                      1900                      1950                      1990                      2001


China                   600                        530                        545                        439                        1,858                     3,583


India                     533                        533                        599                        619                        1,309                     1,957


World                   667                         875                         1,262                     2,111                     5,157                     6,049




As we will demonstrate in this chapter, while China became an imperialist power in the latter half of the first decade of the new millennium, India has not achieved this status. Rather, it is a peculiar semi-colony in the role of a regional power.




A Brief Historical Review




Like China, India has a rich history of early civilization and enormous cultural achievements. Angus Maddison calculated in his study on the sub-continent that India had a similar level of wealth to that of England before the beginning of the colonial era: "At its peak, it is conceivable that the per capita product was comparable with that of Elizabethan England." [2] In a later comprehensive study about the history of world economy, Maddison lowered his estimation of India's wealth but calculated its per capita income in 1700 still at about 55% of Western Europe's. According to his statistics, about 24.4% of the global output was located in India at that time – compared with 21.9% in Western Europe. [3]


However, the South Asian subcontinent, already facing the decay of the Mogul empire (related to what Marx termed the crisis of the Asiatic Mode of Production [4]), became victim of the expansionism of the European – mainly British – colonial powers. During the 18th century and the early 19th century the British East India Company succeeded in conquering India.


The colonial occupation opened a period of sustained stagnation and super-exploitation. According to Maddisson, "India's per capita income in 1750 was probably similar to that in 1950". [5] India's share in global output dramatically declined to 4.2% in 1950, i.e. at the end of Britain's colonial occupation. A study by the economic historians Clingingsmith and Williamson calculates that India's share in world manufacturing output collapsed from 24.5% (1750) in the pre-colonial era to only 2.4% in 1938. [6]


However, the Indian people heroically resisted English rule – starting with the large-scale rebellion of 1857 to the mass protests in the 1920s and 1930, and the Quit India movement and the popular uprising in August 1942.


Finally, British imperialism had to accept India's independence in 1947. But in doing so, London managed to cause great harm to the people by instigating communal hatred between Hindus, Sikhs and Muslims. This resulted in gigantic massacres in a short period of time – more than fifteen million people were uprooted, and between one and two million were killed. On the basis of this tragedy the country became partitioned between Hindu-dominated India and Muslim-dominated Pakistan. [7]


Since then India has been a formally independent state. However, the colonial legacy left a powerful and devastating imprint on the country's economy – as it did on nearly all other former colonies in Africa, Asia and Latin America. Furthermore, formally independent India entered a world which was already dominated by much more advanced and powerful monopolies and imperialist states. As a result, while India of course experienced economic development – the capitalist world does not stand still – it basically remained a backward country subordinated and exploited by imperialism, i.e., a semi-colonial country.


It is crucial for Marxists to always point out the horrible legacy of the colonialization of the so-called Third World by the imperialist powers. Various bourgeois apologists claim that, despite all the unfortunate circumstances, the Western Powers brought “civilization and progress” to the countries of the South. As we have already stated in our pamphlet on Black Africa, it is not only absurd to deny the devastating misery which colonialism brought to these regions. It is also complete nonsense to suggest that the people in India or in Africa would have been incapable of developing the productive forces in their countries by themselves. [8]


Hence, we repeat Trotsky's statement on India written nearly a century ago: "Apologists for imperialism triumphantly compare present day India with what it was prior to colonial occupation. But who can doubt for a moment that a gifted nation of 320,000,000 people would develop immeasurably quicker and more successfully were it freed from the burden of systematic and organized plunder?" [9]




The Characteristics of India's Semi-Colonial Economy




Let us first briefly summarize the Marxist definition of a semi-colonial country as we elaborated it based on the writings of Lenin and Trotsky. [10] For a somewhat more extensive discussion of our theoretical understanding of semi-colonies, we again refer readers to the appendix of this document. Here we confine ourselves to presenting our formula for the definition of semi-colonies: A semi-colonial country is a capitalist state whose economy and state apparatus have a position in the world order where they first and foremost are dominated by other states and nations. As a result they create extra-profits and give other economic, political and/or military advantages to the imperialist monopolies and states through their relationship based on super-exploitation and oppression. However, differences based on historic developments, national specifics, size and regional role as well as the form of industrialization have their influence. The role which each semi-colonial country plays concretely for various imperialist countries as well as the relationship with other semi-colonial countries may differ as well.


The following summary will show that India's development in recent decades has been very contradictory. In fact, it experienced a extremely uneven process of modernization and economic reinforcement in some areas while remaining backward and poverty-stricken in many others. Furthermore, India is a unique country, if for no reason other than that it is due to become the most populous country in the world in only a few years. This is why, when dealing with the case of India, we are confronted with a very peculiar semi-colony which is, at one and the same time, a regional power.


As we have repeatedly emphasized, in order to characterize a country's position in the hierarchy of the imperialist world order, one has to take into account not only one or two indicators but all significant relations. Hence we have to view things in their totality, or to put it in Marx' words, as “a rich totality of many determinations and relations.“ (Marx) [11]


There is no doubt that India experienced a process of great economic growth and modernization in the past decades. Since the early 1990s, it witnessed constant growth of, at least nominally, its average national income. According to official governmental statistics, India's Gross National Income (at constant prices) grew by an average of 6.5% (1992-97), 5.6% (1997-2002), 7.6% (2002-07), 7.8% (2007-2012) and 6.8% (2012-17). Its Per Capita Net National Income (at constant prices) grew, in the same period, by 4.4%, 3.4%, 5.9%, 6.0% and 5.3%. [12] (See Table 4.)




Table 4: India's Gross National Income and Per Capita Net National Income (at constant prices), 1992-2017


                                                                                              Annual Average in Five-Year Periods


1992-97                1997-2002           2002-07                 2007-2012           2012-17


Gross National Income                         6.5%                      5.6%                      7.6%                      7.8%                      6.8%


Per Capita Net National Income        4.4%                      3.4%                      5.9%                      6.0%                      5.3%




This economic growth went hand in hand with an expansion of the process of capitalist accumulation which began accelerating at the start of the 1990s. While Gross Fixed Capital Formation (as a share of GDP) constantly remained below 20% between the 1950s and the 1980s, it has never fallen below 20% since the early 1990s. Professor Kunal Sen, an Indian-born economist, showed that this investment boom was based on private capitalist accumulation: "Instead, the rise in aggregate fixed investment could be attributed to the sharp increase in private fixed investment since the mid-1980s." [13]


Capital accumulation even accelerated and, in the second half of the first decade of this century, it rose to 40% of GDP before declining during the last decade to 30% (which nevertheless is still a very respectable figure). This is lower than the rate of capital accumulation for China, but is similar to that of other neighboring semi-colonial countries like Indonesia or Vietnam. [14]


However, despite these decades of formal growth, India's economy and society as a whole remain backwards. If we take the generally used indicator for economic output – the annual so-called Gross Domestic Output (which is, of course, a concept with significant weaknesses [15]) – we see a huge discrepancy between the size of India's population and its economic strength. India is the second most populated country in the world with 1,326 million people. This is 17.8% of the total world population. While China still has a slightly larger population (1,382 million), India is projected to pass it and to become the world's most populous country by 2022. [16] However, at the same time India's share of world GDP (calculated at current prices): is only 2.6%. In comparison, China share is 13.4%.


Likewise, India GDP per capita was $US 1,586 in 2014 which is less than that of Lao ($US 1,756 US-Dollars) or Zambia ($US 1,715). In comparison, Indonesia's GDP per capita is more than double ($US  3,492) than that of India, and China's is five times as high ($US 7,617 US-Dollars). [17]


When we look to the degree of integration of the labor force into the modern economic process, i.e., how many persons are still working in the agricultural sector, we see a similar picture. India's share of labor force employed in agriculture (% of total employment) is 51.1%, while for China this figure is only 28.3%. [18]


It is true that some modern sectors have emerged in India's economy – e.g., IT software development or Indian firms like Cipla and Ranbaxy in the pharmaceutical industry. However, the economy as a whole is by and large still relatively backward, not only compared with imperialist countries but also with advanced industrialized semi-colonies like Turkey or Mexico. Only 340 out of 1,155 million people, i.e., 29.4% of India’s population, lived in urban areas in 2008. [19] In China the share of the urban population was 50.1% in 2010. [20]


It is also important to point out that India's decades of growth were accompanied by a massive expansion of the informal sector, i.e. laborers "not covered or insufficiently covered by formal arrangements". [21] According to the International Labour Office India is one of the countries with the largest informal sector. In Indian manufacturing contract labor rose massively in the past decades. While there hardly existed such in the early 1970s, it rose around 15% in the 1990s, and reached 34.7% in 2011–12. [22] All in all, about 2/3 of all wage employees are casual workers. [23] According to an OECD report published in 2015, the share of informal laborers in total employment reaches 80% in India. [24]


It is therefore hardly surprising that nearly half of India's population lives in utter poverty. About 42% of its population has to survive on less than $US 1.25 per day. [25] According to Millennium Development Goals 2014 report issued by the UN, 32.9%, i.e., one third, of the world’s 1.2 billion poorest people, live in India. [26]


Furthermore, the old and formally abandoned system of castes had created an extensive ideological environment which had structured the daily life in a way that facilitated exploitation massively.


In other words, India's rapid growth figures have been achieved by the increasing exploitation of the working class and the poor.


In addition, India's growth was spurred on by a massive influx of foreign capital from imperialist powers. Hence, one has to understand that the process of expanded accumulation of capital which has taken place in India during the last 25 years is not so much the result of a strengthening of Indian national capital but rather of foreign imperialist capitalists operating inside India.


In Table 5 we show how, for a quarter of a century, far more foreign capital entered the Indian market every year than the amount of Indian capital that was exported. In other words, foreign imperialist capital was able to substantially strengthen its position vis-à-vis India.




Table 5: India: Inflows and Outflows of Foreign Direct Investment as % of Gross Fixed Capital Formation, 1991-2016) [27]


1991      1992      1993      1994      1995      1996      1997      1998      1999      2000      2001      2002      2003


Inflows               0,1          0,4          0,8          1,3          2,5          2,5          3,5          2,5          2,0          3,3          4,7          4,6          2,8


Outflows            0,0          0,0          0,0          0,1          0,1          0,2          0,1          0,0          0,1          0,5          1,2          1,4          1,2


2004      2005      2006      2007      2008      2009      2010      2011      2012      2013      2014      2015      2016


Inflows               2,8          3,0          6,9          6,2          12,3        8,2          5,2          5,8          4,0          4,9          5,6          7,2          7,0


Outflows            1,0          1,2          4,8          4,2          5,5          3,7          3,0          2,0          1,4          0,3          1,9          1,2          0,8






The respected left-wing Indian Research Unit for Political Economy accurately commented on this development: "These foreign inflows were largely of the relatively footloose finance that is reigning globally. Foreign financial investors now came to own sizeable shares in most of India’s top firms, rivaling promoter stakes. There is no official figure of the current market value of the holdings of foreign direct investors, but it is clear that these too have grown massively; and the opening of more and more sectors to FDI continues. All this has amounted to a massive shift of Indian assets and sectors of the Indian economy to foreign hands, with far-reaching consequences." [28]


Another indication of India's semi-colonial character is its great level of debt compared with other emerging economies. Its General Government Debt to GDP Ratio is at 68.5% (2016) which is much higher than that of China (46.3%), Turkey (31.7%), South Korea (38.9%), South Africa (51.7%), Mexico (56.0%), or Indonesia (27.5%). [29]


As a result, India's external debt (calculated as the ratio of External Debt to GDP) grew from 18.0% (2007) to 23.4% (2016) and its Debt Service Ratio nearly doubled in this period from 4.8% to 8.8%. It is therefore not surprising that India's Foreign Exchange Reserves to Total Debt nearly halved from 138.0% (2007) to 74.3% (2016). [30]


Consequently, India suffers from a chronic negative balance in its Net International Investment Position (NIIP). NIIP data shows the assets owned by foreigners in India and the assets owned by Indians abroad: netting off these two numbers shows the net international investment position of India. According to data released in 2016 by the Reserve Bank of India, foreigners own $912 billion of Indian assets as of March 2016 and Indians (including the foreign exchange reserves that the central bank has) own $550 billion of foreign assets. This implies that the NIIP of India is minus $362 billion (17.4% of its GDP in 2016). [31]


These figures are very significant as they reflect the ongoing transfer of capitalist value away from India. While Indian monopolies are able to squeeze a certain amount of surplus value from their operations abroad, foreign imperialist monopolies get much more surplus value out of India. This demonstrates, once again, that India is not an imperialist economy but rather a semi-colony.


Not surprisingly, a well-known characteristic of India is its high rate of corruption. Among the 16 Asia Pacific countries surveyed by the NPO Transparency International (TI) India is leading the corruption Index by far. While the corruption index of the old imperialist power Japan is the lowest of the region with 0.2%, the younger imperialist power China has a much higher Index of 26% which is still far behind the 69% of the semi-colonial country India. Police bribery rate stands by 54% in India compared to 12% in China. Also, bribery for easier access to health care is far more often in India with 59% compared to 18% in China. [32]


Another symptom of India's semi-colonial character is the huge number of Indian migrants who leave their home country in order to work mostly as super-exploited cheap labor in rich countries (e.g., in the Gulf States or the US). According to the latest figures released by the United Nations, India is the home country of the greatest number of migrants worldwide, with 16 million. [33]


These figures should be sufficient to demonstrate the general lack of modernization and industrialization of India. However, we are aware that the economic development can be – and indeed is in the case of India – very uneven.


One argument which has been put forward as an argument to ostensibly demonstrate that India has become an imperialist or "sub-imperialist" country is the rising number of Indian corporations operating in the world market. While it is true that such corporations exist, there number is limited. Among the Fortune Global 500 list – a list of the 500 most profitable multinational corporations in the world – India has only 6 companies, [34] the same number as the much smaller Taiwan[35] and fewer than half the number of South Korea (15) [36], whose economy is also smaller than that of India. Yet another index, compiled by the US journal Forbes, lists not a single Indian corporation among the 100 biggest global corporations. [37]


We see a similar picture if we examine the international financial sector. As is known, one of the key characteristics of the imperialist epoch is the fusion of industrial and banking (or financial) capital to become finance capital – a process in which the latter usually plays the dominant role. Hence, in the era of imperialism, the size of banks and other financial institutions is an important indicator of the class character of a given country.


However, once again we see that despite India’s soon to be the most populous country in the world, it plays no significant role in the global financial sector. Among the world’s largest 57 banks, ranked by market capitalization, there is only one from India. This is the same number as that for Singapore, Qatar and Brazil – all of which have much smaller populations and economies. In comparison, among these 57 banks there are 10 from China (plus 2 from Hong Kong). [38] Likewise, if one ranks the 50 largest banks based on total assets, there is not a single one from India. [39]


Furthermore, India's banks have overreached themselves with risky financial operations and, as a result, they have accumulated huge amounts of so-called non-performing assets or "bad loans." According to a report released in May 2017 by the consulting firm McKinsey & Co.:"the total stressed assets of Indian banks, including restructured loans, have now outstripped the combined net worth of the sector. The consulting firm pegged stressed assets at Rs 9.6 lakh crore compared to sector’s net worth of Rs 9.24 lakh crore." [40]


The limited relevance of India's multinationals also becomes clearer if we examine the country's capital export – an important parameter for any imperialist economy, as we have outlined above. In addition to loans, the most important indicator of capital export is Foreign Direct Investment (FDI). A good measure for the relevance of capital export in the capitalist production process of a given country is its share of capital exported abroad among the total capital invested worldwide. The UNCTAD measures this annually in the form of FDI outflows as a percentage of gross fixed capital formation. If we take this figure for India (as detailed in Table 4, above), we can see that during the past 26 years, with the exception of five years (2006-10), India’s share never exceeded 2%. By contrast, Indonesia, an economy only 1/3 the size of India’s [41], had more than this 2% share during 10 of these same 26 years (even though there are no figures for Indonesia for several years). [42]


We see a similar picture if we compare India's stock of outward FDI with that of other countries. China's FDI stock, for example, is nine times as large as India's. Malaysia's stock is only slightly smaller than India's, despite the fact that its economy is only 1/7 the size of the latter.[43]


In detailing these statistics, we don’t mean to suggest that one should ignore the expansion of India's monopolies. They have certainly accelerated their foreign operations during the past decade. In a number of countries they act as foreign capitalists who super-exploit the domestic workers. This is particularly the case in Africa.


However, compared with China, it is clearly a much weaker power. As we have shown above, Chinese corporations have been responsible for nearly ¼ of all green field investments in Africa in 2015-16. Indian corporations, on the other hand, accounted for only a meager 1.3% of total green field investments in this continent during the same period. [44]


In summary, we can conclude that while India's monopolies have increased their size and their global operation, they have not been able to gain any significant influence in the global economy, nor is their capital export particularly relevant given the size of their own economy or compared with various other semi-colonial countries in the region.




India's Economic Elites: Many … and at the same time Few




Another argument that India should be considered an imperialist or "sub-imperialist" country is the rising number of its billionaires. And indeed, according to the Forbes 2017 list of billionaires, out of 2,043 billionaires worldwide, 101 are from India, placing it fourth behind the US, China and Germany. [45]


However, if we more closely analyze India's upper bourgeoisie layer, we find a more complex reality. While India has witnessed a certain degree of economic growth and modernization, the backward capitalist conditions of the economy have resulted in only a limited degree of development for Indian monopolies and the country’s solid domestic capital base. At the same time, a large part of the increased wealth went directly into the pockets of either foreign imperialist multinationals or the domestic elite.


As a result India has seen a dramatic rise of inequality and today it is one of the world's most unequal societies. According to the latest data from the Credit Suisse Group's 2016 report on global wealth, the richest 1% of Indians now own 58.4% of the country’s wealth. This reflects a dramatic growth in only a few years – in 2010 this figure was "only" 40.3%. Similarly, the richest 10% of Indians were able to increase their share of the country’s wealth from 68.8% in 2010 to 80.7% by 2016.


These figures are not only obscene, they are even more so when we compare them with those for other countries. For example, the top 1% in China owns 43.8% of the country’s wealth; in Indonesia, they own 49.3%; in Brazil 47.9%; and in South Africa 41.9%. [46]


However, while the Indian superrich were extremely successful robbing their own people, they remain a relatively small group on a global scale – another indication of the general backward nature of India's economy. The same Credit Suisse Group's report conducts a revealing global comparison of the wealth of the world’s capitalists. In the context of our present analysis, the results are revealing as they underline the backward semi-colonial character of India.


According to these figures, India has a population of 1,301 million persons of whom 808 millions are adults. By comparison, we give the figures of China (1,376 million with 1,023 million adults), Africa (1,164 million with 587 million adults) and Latin America (621 million with 410 million adults). Now compare this with the number of millionaires: India: 178,000; China: 1,590.000; Africa: 136.000; and Latin America: 502.000. The Credit Suisse Group's report concludes that India's share of the adult world population is 16.7% and its share of the global millionaires is 0.5%; the figures for Africa are 12.1% and 0.4% respectively; for China 21.1% and 4.8% respectively; and for Latin America 8.5% and 1.5% respectively. [47] (See also Table 6.)




Table 6: Population and Millionaires, Regional Distribution, 2016 (Numbers and Share of World) [48]


Countries/Regions                         Population                                         Adults                                                  Millionaires


                                                            (in millions)                        (in millions)        (share)                   (in thousands)    (share)


India                                                  1,301                                     808                        16.7%                    178                        0.5%


China                                                 1,376                                     1,023                     21.1%                    1,590                     4.8%


Africa                                                 1,164                                     587                        12.1%                    136                        0.4%


Latin America                                   621                                        410                        8.5%                      502                        1.5%




The Parasitic Nature of the Indian Bourgeoisie




The relatively weak, backward nature of the India’s big bourgeoisie is also reflected by the fact that it is particularly parasitic, focused much more on speculation than productive investment. Recently Bloomberg reported a study on Indian stock markets and comparing them with others. The study reveals that Indian corporations raise far less capital from their stock markets even though they have been booming for a long time. For example, Chinese corporations raised nearly $250 billion from the stock exchanges in Shanghai and Shenzen in 2015, at the same time that their Indian counterparts raised less than one-tenth of this some– $21 billion – from their national stock markets. Instead, Indian financial capitalists focus much more on short-term speculation like derivatives.


The study point out the curious situation that India traded 6 times more currency derivatives than the United States in 2015! "India’s share of world trade is 2.3 percent but its share of exchange-traded currency derivatives is nearly 50 percent. India traded 6 times more currency derivatives than the United States in 2015, whose share of world trade is 12 percent!"


The Bloomberg author concludes: "The seeming success of Indian capital markets is the success of speculative trading in derivatives." [49]


Another indication of the semi-colonial character of the Indian bourgeoisie is its long history of massive capital flight. As we explained in our book The Great Robbery of the South, capital flight benefits both the capitalists in the poor country as well as the banks and other financial institutions in the rich imperialist ones. This is why they welcome and encourage such capital flight. [50]


As various studies have demonstrated, India has experienced a huge amount of capital flight in recent decades. According to a study by Global Financial Integrity, which calculated the size of illicit financial outflows from India since 1948, "it is entirely reasonable to estimate that more than a half-trillion dollars have drained from India since independence.” [51]


In conclusion, we can say that India’s big bourgeoisie has been able to strengthen itself through the systematic and vicious robbery of the working class and poor in India and – to a certain degree – also in poor semi-colonial countries (e.g., in Africa). However, its economy remains very backward, having failed to create a strong capitalist class and, as a result, it has been unable to compete with imperialist powers on the global market, even though it is soon to be the home of the largest population in the world.




India as a Regional Power and an Oppressor State




So far we have described in detail how India's economy is essentially backward and semi-colonial in nature, even if it has developed some modern sectors and there are a number of Indian monopolies which operate on the world market. But how shall we characterize India as a political and economic power? This is an important issue precisely because we have witnessed examples of Great Powers – e.g., Russia with its emergence as an imperialist power in the early 2000s – which are relatively weak economically compared to other Great Powers, but which have been able to make up for this due to their political and military strength (e.g., in the case of Russia ‒ because of their status as a nuclear super-power).


Once again, to a certain degree we see a contradictory picture. On the one hand, India plays a nearly automatic role as a regional power in light of its sheer size compared to several of its neighboring countries. As a country with a population of 1.3 billion, it enjoys a hegemonic role vis. a vis. small countries with which it shares a border like Bhutan (0.75 million citizens), Sri Lanka (20.81 million citizens) or Nepal (28.85 million citizens). Therefore, not without reason do Nepali Maoists and other progressive and nationalist forces in these neighboring countries accuse India of being an "expansionist" and "hegemonic" force.


Furthermore, the capitalists Indian state acts as an oppressive force in those places where it super-exploits poor workers and peasants – whether in Asian or African countries. For example, there is a small community of Indian capitalists in African countries like Zambia who super-exploit domestic workers. [52]


In addition, we have to note that the Indian state is also an oppressor within its own territory towards a number of smaller nationalities. [53] This is the case in Kashmir, Assam, Nagaland, Tripura, Manipur as well other provinces. To this we have to add the indigenous population in India, the Adivasi, who suffer terrible persecution. The intensified oppression and discrimination of minorities is also exacerbated by the increasing inequality between the different states inside India. [54]


Hindu chauvinists try to enforce an artificial "national unity" despite the fact that, according to official government statistics, only 41.03% of India's citizens speak one of the numerous Hindi dialects. In fact, India is a multi-national state or, more appropriately put, a "Prison of Nations". [55]


India is also a regional power because it possesses – like its neighbor and arch-enemy Pakistan, against which it has already fought three bloody wars – between 100 and 120 nuclear warheads. (Pakistan is reported to have about 110–130 nuclear warheads.) [56]


However, despite its status as the world’s second most populous country, India is very far from being a global power. Its influence is almost entirely limited to South Asia. And within South Asia itself, its influence is regularly being challenged given its ongoing conflicts with neighboring Pakistan and China. India’s strictly regional role in is stark contrast to that played by China and Russia, both of which are global powers.




Drawing a Balance Sheet of India's Class Character




Let us now summarize our discussion of India's class character. We consider India to be a peculiar semi-colony which is at the same time also a regional power. We recognize that India's economy experienced a period of rapid growth and modernization during the past 25 years, which has enabled it to develop a certain number of monopolies operating in the world market, and which exploit workers and the poor in semi-colonial countries in Africa and Asia.


However, as Lenin emphasized, Marxists have to view "the entire totality of the manifold relations of this thing to others." (Lenin) [57] Looking at India's economy as a whole, it is clear that its modern sectors are not sufficiently advanced to alter the overall backward capitalist nature the country. These monoplies rather appear as islands in a sea of backwardness. India has ensured its economic growth by massively exploiting its working class and by increasing its economic subordination to foreign imperialist capital. True, Indian monopolies operate and exploit abroad, but given the size of the country and its economy, they play a rather secondary role when compared to those of other countries. Foreign imperialist domination of India is increasing at a much faster rate than that at which Indian capitalists succeed in dominating other peoples abroad.


Similarly, India is unable to play a significant role in global politics. In the 1950s and 1960s, India attempted to play such a role when Prime Minister Jawaharlal Nehru initiated the so-called Non-Aligned Movement. Needless to say, this initiative didn’t help India overcome its semi-colonial status, and India's standing in the Non-Aligned Movement was severely damaged when China gave it a bloody nose in October-November 1962, after Nehru provoked a reactionary border war against Mao's China, and then futilely called the US administration for help. As a matter of fact, today its sphere of influence is limited to some small neighboring countries. It is stuck in its permanent state of conflict with Pakistan. It is unable to play any significant independent role in world politics, but instead is forced to subordinate itself to Great Powers like the US, China or Russia.


It may appear as strange to some readers that there are countries which oppress and exploit some peoples while at the same time being victims of foreign exploitation. In fact, such a phenomenon is not so unique. We have already discussed such a case in our book on Greece. [58] As we demonstrated there, Greek capital plays a certain "imperialist" role in small and impoverished neighboring countries like Albania or Bulgaria. However, at the same time, it has for a long time fallen prey to international imperialist banks and monopolies. A similar picture becomes clear when we examine Brazil or Turkey.


India is also not a unique phenomenon in its simultaneously being a semi-colonial country exploited by imperialist monopolies and an oppressor state against national minorities within its own "empire." We discern similar features in other semi-colonial states like Turkey (against the Kurds) or Iran (against its various national minorities).


Hence, we repeat, one must view these phenomena in their totality. As we have stated in past studies, a given state must be viewed not only as a separate unit, but first and foremost in its relation to other states and nations. Similarly, by the way, classes can only be understood in relation to one other. An imperialist state usually enters a relationship with other states and nations whom it oppresses, in one way or another, and super-exploits – i.e., appropriates a share of the capitalist value produced by its victims. Again this has to be viewed in its totality, i.e., if a state gains certain profits from foreign investment but has to pay much more (debt service, profit repatriation, etc.) to other countries' foreign investment, loans, etc., this state can usually not be considered as imperialist but rather as semi-colonial.


Likewise, we repeat that one needs to consider the totality of a state’s economic, political, and military position in the global hierarchy of states. Thus, we can consider a given state as imperialist even if it is economically weaker, but still possesses a relatively strong political and military position (like Russia before 1917 and, again, in the early 2000s). Such a strong political and military position can be used to oppress other countries and nations and to appropriate capitalist value from them.


In the case of India, we clearly see that ultimately its exploitation by imperialist powers is much greater than its own "imperialist" operations in Africa and other semi-colonial countries. At the same time, India has been unable to balance its relative weakness on an economic level with a strong role in world politics. All in all, one can characterize India as a giant with feet of clay.


In past writings we have emphasized that it is not sufficient to divide countries into categories of imperialist or semi-colonial states. There are, of course, many different shades both among imperialist countries (Great Powers and smaller states, etc.) as well as between different semi-colonies. We have differentiated between advanced or industrialized semi-colonies like, for example, Argentina, Brazil, Egypt, Turkey, Greece, Iran, Poland or Thailand on the one hand and poorer or semi-industrialized semi-colonies like Bolivia, Peru, the Sub-Saharan African countries, Pakistan, Afghanistan, Indonesia, etc.


India is indeed a special case simply because of its enormous size and because of its uneven character of a backward economy combined with some modern monopolies. It is a peculiar semi-colony and a regional power.




Brief Remarks on an Historic Analogy: The Ottoman Empire




Some might object that it would be a contradiction in itself to characterize India both as a peculiar semi-colony and as a regional power. However, we consider such an objection to be mistaken and, indeed, the Marxist classics in the past used such a category for a similar case: the Ottoman Empire. This state was formally one of the big powers in Europe and the Middle East, controlling a number of foreign peoples in the Middle East as well as in the Balkans. (See Map 5)




Map 5: The Ottoman Empire in 1912 [59]

(See below)



Not dissimilar to India today, the Ottoman Empire had a peculiar, contradictory nature. On the one hand, it was a major empire at that time and oppressed numerous Arab and European peoples. On the other, its economy was in decline and was, in fact, dominated by European banks and the Great Powers. The major European imperialist powers – Britain, France and Germany – competed against one other for influence and domination over the Ottoman Empire.


Despite the Ottoman Empire’s being a major power – a regional power in modern language – which oppressed many peoples, the Marxists at that time characterized it as a semi-colonial country. This was because they considered the domination of the Ottoman Empire by the European imperialist powers to be the primary, decisive element.


V.I. Lenin, the leader of the Bolshevik Party, stated repeatedly in his writings on imperialism, that the Ottoman Empire (or Turkey as it was also called at that time) was a semi-colonial state.


"National wars waged by colonies and semicolonies in the imperialist era are not only probable but inevitable. About 1,000 million people, or over half of the world’s population, live in the colonies and semi-colonies (China, Turkey, Persia)." [60]


"The fewer the countries to which capital can still be exported as advantageously as to colonies or to such dependent states as Turkey—since in such cases the financier reaps a triple profit as against capital exports to a free, independent and civilised country like the United States of America—the fiercer is the struggle for the subjugation and partition of Turkey, China, etc. That is what economic theory reveals about the period of finance capital and imperialism. That is what the facts reveal." [61]


The same position was defended by other Bolshevik theoreticians like Grigory Zinoviev and Nikolai Bukharin. [62]


Of course, we are aware that every historical analogy has its limitations. For example, the Ottoman Empire oppressed more foreign peoples – in proportion to the dominating Turkish population – than India does. On the other hand, the economic domination of the Ottoman Empire by the imperialist powers might have been stronger than it is today in the case of India.


Nevertheless, the legitimacy of the analogy is obvious: the Ottoman Empire was an historic example of a big state, indeed a regional power, which oppressed other peoples but which was dominated by imperialist powers. As the latter constituted the dominant element, the Marxist classics characterized it as a "semi-colony." We believe that India today is a similar case and hence such a categorization is applicable.


[1] The figures are taken from Angus Maddison: World Development and Outlook 1820-2030; p. 5, Angus Maddison: The World Economy, OECD 2006, p. 264; Angus Maddison: World Population, GDP and Per Capita GDP, 1-2008.

[2] Angus Maddison: Class Structure and Economic Growth. India and Pakistan since the Moghuls, First published in 1971, Reprinted in 2006 by Routledge, New York, 2006, p. 18

[3] Angus Maddison: The World Economy, OECD 2006, pp. 641-642

[4] It would exceed the limits of this study to discuss the issue of the Asiatic Mode of Production. We limit ourselves here to state that we agree with the conception advanced by Marx, and upheld by Lenin, about the Asiatic Mode of Production: "In broad outline, the Asiatic, ancient, feudal and modern bourgeois modes of production may be designated as epochs marking progress in the economic development of society." (Karl Marx: A Contribution to the Critique of Political Economy (1859), in: MECW 29, p. 263) We reject the claims of the Stalinist distorters of history that an Asiatic Mode of Production has never existed and that the mode of production in China, India, in the Ottoman Empire, etc., have all been variations of a so-called Oriental Feudalism. The Marxist conception of the Asiatic Mode of Production has been well defended and elaborated by David Riazanov: Karl Marx on China (Published in English language in Labour Monthly, February 1926, and Karl August Wittfogel: Wirtschaft und Gesellschaft Chinas. Versuch der wissenschaftlichen Analyse einer grossen asiatischen Agrargesellschaft. 1. Teil: Produktivkräfte, Produktions- und Zirkulationsprozess. C.L. Hirschfeld, Leipzig 1931). It is noteworthy that even Eugen Varga, a leading and thoughtful economist during the Stalinist era, published an essay shortly before his death in which he refuted the Stalinist mythology and defended the Marxist conception of the Asiatic Mode of Production. See Eugen Varga: Politico-Economic Problems of Capitalism, Progress Publishers, Moscow 1968, pp. 330-351. See also Ernest Mandel: Entstehung und Entwicklung der ökonomischen Lehre von Karl Marx (1843-1863), Europäische Verlagsanstalt, Frankfurt 1968, pp. 113-136.

[5] Angus Maddison: Class Structure and Economic Growth. India and Pakistan since the Moghuls, p. 18

[6] David Clingingsmith, Jeffrey G. Williamson: India’s Deindustrialization in the 18th and 19th Centuries, Harvard University, 2005, p. 34

[7] See on this e.g., D.N. Panigrahi: India's partition. The story of imperialism in retreat, Routledge, New York 2004; Joya Chatterji: Bengal divided. Hindu communalism and partition, 1932-1947, Cambridge University Press, Cambridge 1994; Joya Chatterji: The Spoils of Partition. Bengal and India, 1947–1967, Cambridge University Press, Cambridge 2007; Bidyut Chakrabarty: The Partition of Bengal and Assam, 1932–1947, RoutledgeCurzon, London 2004; William Dalrymple: The Great Divide - The violent legacy of Indian Partition, The New Yorker, June 29, 2015 Issue,

[8] RCIT: Theses on Capitalism and Class Struggle in Black Africa, 13 April 2017,

[9] Leon Trotsky: The Revolution in India. Its Tasks and its Dangers (1930), in: Writings of Leon Trotsky 1930, p.242,

[10] On this, see, e.g., Michael Pröbsting: The Great Robbery of the South. Continuity and Changes in the Super-Exploitation of the Semi-Colonial World by Monopoly Capital Consequences for the Marxist Theory of Imperialism, RCIT, Vienna 2013,; Michael Pröbsting: Greece – A Modern Semi-Colony. The Contradictory Development of Greek Capitalism, Its Failed Attempts to Become a Minor Imperialist Power, and Its Present Situation as an Advanced Semi-Colonial Country with Some Specific Features, RCIT, Vienna 2015,

[11] Karl Marx: Grundrisse [Outlines of the Critique of Political Economy (Rough Draft of 1857-58)]; in: MECW 28, p. 37

[12] Ministry of Finance, Government of India: Economic Survey 2016-17, Statistical Appendix, A4 and A5

[13] Kunal Sen: Trade Policy, Inequality and Performance in Indian Manufacturing, Routledge, New York 2009, p. 50

[15] See Michael Pröbsting: The Great Robbery of the South, p. 68. See also the thoughtful criticism by John Smith in the chapter "The GDP Illusion" in his book Imperialism in the Twenty-First Century. Globalization, Super-Exploitation, and Capitalism’s Final Crisis, Monthly Review Press, New York 2016, pp. 252-278

[16] United Nations, Department of Economic and Social Affairs: Statistical Yearbook 2016, New York, 2016, pp. 13-15

[17] United Nations, Department of Economic and Social Affairs: Statistical Yearbook 2016, New York, 2016, pp. 103-110

[18] World Bank: Employment in agriculture (% of total employment), and; we used the last available figures which was 2010 for India and 2015 for China. Concerning the misery of India's poor peasants we refer also to: India’s Peasantry under Neoliberal Rule, Aspects of India's Economy, No. 66-67 (May 2017),

[19] Shirish Sankhe, Ireena Vittal, Richard Dobbs, Ajit Mohan, Ankur Gulati, Jonathan Ablett, Shishir Gupta, Alex Kim, Sudipto Paul, Aditya Sanghvi, Gurpreet Sethy: India's urban awakening: Building inclusive cities, sustaining economic growth, McKinsey Global Institute, 2010, p. 44

[20] United Nations, Department of Economic and Social Affairs: 2015 Demographic Yearbook, New York, 2016, p. 146

[21] International Labour Office: Non-standard employment around the world: Understanding challenges, shaping prospects, ILO, Geneva 2016, p. 15

[22] ILO: Non-standard employment around the world: Understanding challenges, shaping prospects, pp. 94

[23] ILO: Non-standard employment around the world: Understanding challenges, shaping prospects, pp. 68-69

[24] OECD: In It Together. Why Less Inequality Benefits All, Paris 2015, p. 296

[25] OECD: Divided We Stand. Why Inequality Keeps Rising, Paris 2011, p. 48

[26] United Nations: The Millennium Development Goals Report 2014, p. 9

[27] UNCTAD: World Investment Report 2017, Annex Tables, FDI outflows as a percentage of gross fixed capital formation, 1990-2016, FDI inflows as a percentage of gross fixed capital formation, 1990-2016,

[28] Research Unit for Political Economy: Balance of Payments: The Political-Economic Background, Aspects of India’s Economy No. 54 (June 2013),

[29] Ministry of Finance, Government of India: Economic Survey 2016-17, p. 108

[30] Ministry of Finance, Government of India: Economic Survey 2016-17, p. 154

[31] Akhilesh Tilotia: CAD: Unless India reverses sustainably, net foreign assets may stay negative, August 3, 2016,

[32] Suparna Goswami: Study Finds India Is Asia's Most Corrupt Country, While Japan Comes In Last, March 8, 2017,

[33] United Nations Department of Public Information: Fact Sheet, UN Launches Biennial Update of " Trends in International Migrant Stock: The 2015. Revision"

[37] Forbes: The World's Largest Companies (2014),

[39] The 50 Largest Banks in the World 2017,

[40] Ira Dugal: Bad Loans Soar To Rs 7.7 Lakh Crore In FY17, Bloomberg, May 22, 2017,

[41] United Nations, Department of Economic and Social Affairs: Statistical Yearbook 2016, New York, 2016, p. 110

[42] UNCTAD: World Investment Report 2017, Annex Tables, FDI outflows as a percentage of gross fixed capital formation, 1990-2016,

[43] UNCTAD: World Investment Report 2017, Annex Tables, FDI outward stock, by region and economy, 1990-2016

[44] Avinash Nair: To counter OBOR, India and Japan propose Asia-Africa sea corridor, May 31, 2017,

[46] Credit Suisse: Global Wealth Databook 2016, p. 148

[47] Credit Suisse: Global Wealth Databook 2016, p. 142 and 150

[48] Credit Suisse: Global Wealth Databook 2016, p. 142 and 150

[49] Praveen Chakravarty: India’s Capital Markets: Where Has All The Money Gone? April 28, 2017,

[50] Michael Pröbsting: The Great Robbery of the South, pp. 168-172

[51] Dev Kar: The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008, Global Financial Integrity, November 2010, p. iii

[52] On this, see, e.g., ELA (Zambia) and RCIT: Zambia: Down with the Exploitation by Foreign Powers! 18.08.2017,; ELA (Zambia): INDIAN EXPLOITATION CONTINUES: 7% PAY-RISE TO CALL CENTRE WORKERS AT ISON AND TECH IS AN INSULT, UNACCEPTABLE! August 2, 2017,

[53] On the national question in India see e.g., Samir Sharma: An India-China Comparative Perspective on Minorities: Some Preliminary Explorations, Centre for Political Studies, 2014; Salimullah Khan: The national question in India (Part I-IV) April 2017,

[54] The OECD noted on this development: "By contrast, trends in India tend to reflect the accentuation of imbalances between that country’s states. Indeed, there appears to be growing concern in India that the benefits of growth were concentrated in the already richer states, ultimately contributing to widening the gap with the poorest and most populous states (i.e. Bihar, Madhya, Pradesh, Uttar Pradesh and Kerala)." (OECD: Divided We Stand. Why Inequality Keeps Rising, Paris 2011, p. 53)

[55] On the Marxist position on the national questions see e.g., V.I. Lenin: The revolutionary Proletariat and the Right of Nations to Self-Determination (1915); in: LCW 21; V.I. Lenin: The Socialist Revolution and the Right of Nations to Self-Determination (1916); in: LCW 22; V.I. Lenin: Resolution on the National Question. Resolution of the Summer 1913 Joint Conference of the Central Committee of the R.S.D.L.P. and Party Officials (1913); in: LCW 19; On the Bolshevik's assessment of the national question in Czarist Russia see e.g. M. N. Pokrovskii: Russia as the Prison of Nations (1930), in: M. N. Pokrovskii: Russia in World History; selected essays, Edited by Roman Szporluk, University of Michigan Press, Ann Arbor 1970), pp. 108-116.

[56] SIPRI Yearbook 2016 (Summary), p. 23; see also Alia Chughtai: Nuclear neighbours: The India-Pakistan arms race, Al Jazeera, 10 Aug 2017,

[57] V.I.Lenin: Conspectus of Hegel's Science of Logic (1914); in: Collected Works Vol. 38, p. 220

[58] Michael Pröbsting: Greece – A Modern Semi-Colony. The Contradictory Development of Greek Capitalism, Its Failed Attempts to Become a Minor Imperialist Power, and Its Present Situation as an Advanced Semi-Colonial Country with Some Specific Features, RCIT, Vienna 2015,

[60] V. I. Lenin: The Junius Pamphlet (1916), in: LCW 22, p. 310

[61] V. I. Lenin: The Collapse of the Second International (1915), in: LCW 21, p. 230. For more quotes of Lenin on this issue see e.g.: "Three “semi-colonial” countries (Turkey, China and Persia)" (V. I. Lenin: Socialism and War (1915), in: LCW 21, p. 302) or "Only in this sense did socialists recognise “defence of the fatherland”. Even today it must be recognised in this sense; for instance, the defence of Persia or China against Russia or Britain, of Turkey against Germany or Russia, of Albania against Austria and Italy, etc." (V. I. Lenin: Opportunism, and the Collapse of the Second International (1915), in: LCW 21, p. 440)

[62] See e.g., Grigorij Sinowjew: Der Krieg und die Krise des Sozialismus (1917), Verlag für Literatur und Politik, Wien 1924, p. 278; Nikolai Bukharin: Imperialism and World Economy (1915), Martin Lawrence Limited, London, p. 86


Map 5: The Ottoman Empire in 1912