People's Democracy

Editorial

Perfidious Designs of UPA 2 Govt

THE fact that the government had decided to reduce the price of petrol by around Rs 2 per litre on the eve of the winter session of parliament sends out a seemingly positive signal that this decision was taken in order to brace itself from facing the onslaught of the opposition and may be some of its own (apart from hypocritical Trinamul Congress) allies in the UPA.  While this may mercifully appear as the government being sensitive to its constitutional obligation of being  accountable to the parliament, it masks a more perfidious design. 

The perfidy lies in the UPA-2 government’s loyal adherence to a Machiavellian dictum: `first show the people the worst that you are capable of and then proceed to dilute it.  The people shall then heave a sigh of relief’. 

This government is, of course, capable of even worse.  But the perfidy lies in its justification for the reduction in the price.  The government has argued that since the international price of crude oil has fallen, therefore, it has reduced the price of petrol.  If anything, the price of crude oil at the international benchmark, Brent, was on November 4, 2011, when the price was hiked, $ 112.22 a barrel.  As we go to press, on November 16, 2011, this price stood at $ 115.61.  If these are the facts and if such is the logic of the government, then the prices of petroleum products should have constantly declined rather than being increased.  Further, the rupee per dollar has become more expensive rising from around 47 to close to 52 during the last month.  This makes the rupee value of petroleum products more expensive!

The hike in the rates of petroleum products in India have, in fact, very little to do with the fluctuations in the international market.  In January 2011, when the price of petrol was increased by Rs 2.5/litre, the cost per barrel was close to $99.  In May when the price was hiked by Rs 5/litre, the cost fluctuated between $ 110 and 115. Keeping aside the 0.33 paise/litre hike in July, the September hike of Rs. 3.14/litre took place when the cost fluctuated between $ 105 and 108 per barrel. 

Clearly, these hikes have been affected, as argued in this column last week, primarily to mobilise additional revenue for the government exchequer in preparation for the coming annual budget whose primacy appears to be to contain the fiscal deficit.  As argued last week, the entire fiscal deficit can be wiped out if the enormous tax concessions for the corporates and the rich are withdrawn.  This UPA-2 government is using the petroleum sector as its `milch cow’ for its revenues at the expense of the people.  In the process, it is unleashing a cascading impact on inflation.

This winter session of parliament will be a turbulent one. Apart from the issue of price rise, this session shall also see many a battle on the issue of corruption.  The Left parties shall focus on the unprecedented extra burdens being imposed on the people through this relentless continuous rise in prices of all essential commodities. 

Despite all claims of controlling price rise, food inflation is now around 12 per cent. Vegetables are costlier by 26 per cent, pulses by 14 per cent, fruits by 12 per cent, eggs, fish and meat by 13 per cent and milk by 12 per cent. In other words, the daily life existence of the aam admi  continues to come under severe assaults.   

On the issue of corruption in high places, the parliamentary standing committee is examining the bill on the Lokpal and Lokayuktas.  While we shall have to wait for its recommendations, some of these brazen instances of humongous corruption continue to remain under investigation by various authorities including those under the supervision of the apex court.  The parliamentary public accounts committee and the joint parliamentary committee are examining the 2G spectrum scam. 

Even the ineffective measures undertaken by the government in the name of controlling inflation, like the monetary policies of increasing interest rates, are coming under attack by India Inc as measures that are dampening the investment climate in the country.  They seek cheaper and more ready access to funds.  However, little of such available funds have gone into productive investments precisely because the purchasing power amongst the people is sharply declining, lowering the levels of domestic demand.  Most of these funds have, instead, gone into speculative trading which, on the one hand, pushes up the prices of commodities and, on the other, maximises profit.  Or, such funds have gone as the flight of capital to be tucked away in safe tax havens abroad, or, in accumulating gold and other valuables.  India Inc wants more such funds to maximise their profits through speculation rather than allow such funds to be spent through public investments to build our much-needed infrastructure and generate jobs in the economy enlarging the purchasing power of the people. 

Their cries for further financial reforms found an echo in the decision of the union cabinet, as we go to press, to permit, for the first time, a 26 per cent foreign direct investment in the pension sector.  If approved by parliament, this will give international finance capital (IFC) access to roughly $ 12 billion of assets today that are in the pension fund.  The expectations of India as an `emerging economy’ further raises the predatory aspirations of IFC to reap super speculative profits from India. 

UPA-1 had introduced the Pension Fund Regulatory and Development Authority Bill in 2005. Due to the opposition by the Left parties whose support was crucial for the survival of that government, this never saw the light of the day.  Along with this, the Left’s refusal stopped liberal financial reforms in the banking and the insurance sectors.  It is precisely because of this role played by the Left that India remained relatively protected from the devastating impact of the global financial meltdown in 2008.  If India today prides itself for having braced the global economic slowdown and recessionary conditions, so far, it is primarily because of this role of the Left parties during the UPA-1.

Under pressure from the IFC and India Inc, the UPA-2 government may well get the pension funds legislation passed through the parliament with the able and vocal support of the BJP.  Crores of employees who remained relatively protected so far from the global financial turbulence will now be exposed to such vulnerability adversely impacting their livelihood status. The Left is committed to strongly oppose such reforms for financial liberalisation in the interests of Indian people and the fundamentals of our economy. 

This coming winter session of the parliament will, therefore, be a stormy one where the Left parties will raise and fight to protect the interests of the people.  This, however, can only be effective when it is combined with the strength of the popular protests and struggles outside.  The Left parties are committed to strengthening such struggles in the days to come. 

(November 16, 2011)