People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 45

November 16, 2008



CPI(M)’s Suggestions For Protecting Indian People

THE CPI(M) has urged upon the UPA government to abandon its fiscal fundamentalist approach and instead focus on increasing the purchasing power of the common man. This is the only way to overcome the adverse impact of the unfolding global economic crisis on our economy and people.

CPI(M) Polit Bureau member Sitaram Yechury released a set of concrete suggestions on protecting Indian people from the global economic crisis in a press conference at AKG Bhavan on November 7, 2008.

Faulting the Manmohan Singh government for not acknowledging the real cause of this global crisis – the bankruptcy of neo-liberal globalisation – Yechury advised it to at least follow the likes of Fukuyama, Sarkozy, Merkel and even Obama who have all called for restructuring capitalism. He said the fundamental problem with the government is its wrong diagnosis of the current crisis due to which its wrong prescriptions are failing to yield results. “They are barking up the wrong tree. The weakness lies with the borrower and not lender. Increasing liquidity in the system will not solve the problem as long as the borrowers’ capacity and solvency are increased. And for this the government should generate employment, strengthen agriculture and thus generate demand”. He termed as illogic the government’s relying upon one single policy instrument to achieve two policy goals ­–– controlling inflation and reversing growth slowdown.

Yechury lambasted the government’s refusal to bring down the prices of diesel and petrol by Rs 4 and Rs 2 respectively in view of the huge drop in the international oil prices (from around $140 per barrel to below $60 per barrel). He contrasted this to government’s decision reducing the price of Aviation Turbine Fuel (ATF) by a whopping Rs 26 per litre in the recent past. Along with this the excise duty on ATF has been reduced by Rs 1.80 per litre. “This is nothing but giving a bonanza to corporates at the expense of people”, he said and announced that this will be made an issue in the polls to the five state assemblies.

Yechury objected to prime minister meeting only the corporate bigwigs and bankers to discuss policy responses while not caring to interact with either the state governments, trade unions or other organisations representing sections of the people who are facing the brunt of the adverse effects of the crisis. He demanded a wide ranging dialogue with all sections of people by the government before taking policy decisions.

Below we give the full text of the press release issued at the press conference.


It is clear by now that the global financial crisis has graduated into a global economic crisis of serious proportions. The advanced economies are set to experience a protracted recession and the developing countries across the world, including the Indian economy, will also be adversely affected.

The UPA government’s responses to this evolving situation, however, have been extremely disappointing. Ever since the government has come out of its initial state of denial, the measures adopted by it reflect on the one hand a sheer lack of comprehension of the causes behind and the proportions of the current crisis and on the other hand a proclivity towards appeasing myriad financial interests and corporate lobbies. The fact that the UPA government is relying upon only one policy instrument, namely the interest rate, to both control inflation as well as reverse the growth slowdown betrays the illogic behind its policy paradigm. It is a rudimentary lesson in economic theory that two policy goals cannot be achieved using a single policy instrument.

The UPA government has so far chosen to meet only the corporate bigwigs and bankers in order to discuss policy responses; neither have the state governments nor other political parties, trade unions, farmers’ organisations and other organisations representing crucial stakeholders been consulted. It is indeed strange that at a time when the neo-liberal vision of putting corporate profits over peoples’ interest and relying upon ‘trickle down economics’ is getting discredited across the world, the economic managers of the UPA government are clinging on to it. In this backdrop, the CPI(M) is putting forward a set of concrete suggestions in order to tackle the adverse impact of the global recession on the Indian economy and protect the interests of the people.

Broad-based Growth

through Fiscal Stimulus

Protecting Existing Jobs

Specific Measures to

Boost the Real Economy

Tightening Financial Regulation and

Reviving Development Finance