People's Democracy

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


No. 45

November 11, 2012




Congress Rally: Chilling Lack of Any Remorse


THE leader of the ruling UPA-2 coalition government, the Congress party, held what it called a mega rally at Delhi last Sunday. This rally, it was announced, was in support of the UPA-2 government and its policies. The thrust of the speeches made by the Congress president and UPA chairperson, the Congress general secretary and the prime minister mainly concentrated on the issues of corruption and in defending the neo-liberal economic reforms particularly permitting Foreign Direct Investment (FDI) in the retail trade sector.  All the speeches were marked by a chilling lack of any remorse at the growing burdens being imposed on the vast mass of our people by this government. 


On the issue of corruption, the UPA chairperson said that they will “fight all graft charges against us and none found guilty will be spared”.  The Congress general secretary, heir to the Gandhi dynasty, claimed that only they were working against corruption.  He thundered that there was a need to “change the system” to fight corruption. “I have seen the system from within for eight years. I can tell you that the problem is the system.”   People, however, were left guessing as to what these changes are and who will bring them about. Blaming the opposition for blocking the Lokpal Bill in the last winter session of the parliament, he said, “We will pass it, just wait and watch”. 


Now, the whole country knows and has seen it on the television as to how the Congress party sabotaged the passage of the Bill at the midnight hour in the Rajya Sabha during the last winter session. People, once again, were left guessing as to when the current Lokpal Bill with important amendments to make it stronger and effective, pending before the Rajya Sabha, will be passed by the parliament. 


As regards this high talk  of `changing the system’, it needs to be underlined that it is the Congress party that is principally responsible for putting in place the current structure of the neo-liberal economy and reforms that have opened up hitherto unknown and inconceivable avenues for mega corruption. This neo-liberal trajectory led to the mushrooming of crony capitalism of the worst order.  As a result, lakhs of crores or trillions of rupees have already been looted and continue to be looted further.  Far from changing the system, all the three main speakers supported and endorsed the neo-liberal policy reform trajectory stating that India cannot develop without such reforms. 


The prime minister, in fact, made a strong defence of the economic reforms in his speech that was a virtual election campaign. Saying that no country “will be able to address its biggest challenges without economic development”, he continued to say that opening up the economy further to foreign capital will create more jobs for the youth. Justifying the burdens being imposed on the vast masses of our people, the PM said, “Many times we need to adopt the more difficult path rather than take the easy way out because that may be beneficial for the country’s future.”


In this vein, he justified the hike in the prices of petroleum products saying that the government’s subsidy bill is growing.  The consequent growing fiscal deficit “will hurt the people of this country in the long run”. As an economist, he should have known that John Maynard Keynes had once famously commented that in the long run, we are all dead!


Are the subsidies for the poor the cause for the growing fiscal deficit?  We have shown in these columns in the past that the subsidies to the rich in terms of tax concessions to the corporate and high income tax payers cost the exchequer, according to last year’s budget papers, a huge sum of Rs 5.28 lakh crores.  The high budget deficit of 6.9 per cent of our GDP translates to Rs 5.22 lakh crores.  The fiscal deficit, therefore, is mainly caused by these huge subsidies to the rich while the poor are made to bear the burden of reducing this deficit by compounding their misery.  This, Mr Prime Minister, is simply not acceptable. 


Given this, the PM’s concern that the economic development needs to reach the poor and the common people and that it will enable everyone to get all basic amenities sounds hollow. 


The PM strongly defended the decision of permitting FDI in the retail trade sector saying that this is for the betterment of the people particularly the farmers. 


The opposition to allowing FDI in the retail sector began from the moment when such a proposal was first announced in the 2004-05 budget speech.  Given the firm opposition by the Left parties, whose support was crucial for the then UPA-1 government, this was shelved.


Opposing such a proposal, the Left parties, in a note to the then UPA-Left Coordination Committee in October 2005, highlighted the fact that retail trade, on the basis of a conservative estimate,  contributes around 11 per cent to India’s GDP and had then employed over 40 million people.  According to the Fourth Economic Census 1998, retail trade accounted for 42.5 per cent of the total non-agricultural ‘own account enterprises’ in rural areas and 50.5 per cent in the urban areas.  This translates into 38.2 per cent in rural and 46.4 per cent in urban employment in such ‘own account enterprises’.  Therefore, crores of Indian people are today dependent upon retail trade for their livelihood. Undermining this by permitting the entry of multinational giants will only push more millions into poverty and misery.


Various studies have shown that the entry of supermarket giants would lead to a fall in prices and increase in employment is a myth. In fact, a report of a committee of the US House of Representatives as early as February 2004 concluded that “Walmart’s success has meant downward pressures on wages and benefits, rampant violations of basic workers rights and threats to the standard of living in communities across the country. The success of a business need not come at the expense of workers and their families. Such short-sighted profit-making strategies ultimately undermine our economy.”


Various studies have shown that as far as the role of FDI driven supermarkets in containing food inflation is concerned, the evidence from Latin America (Mexico, Nicaragua, Argentina), Africa (Kenya, Madagascar), and Vietnam, Thailand shows that the supermarket prices for foods and vegetables and other basic food were higher than those in traditional markets.


That these giant chains will increase employment is belied by the experience of Vietnam. While eighteen jobs were created by a street vendor, ten by a traditional retailer and eight by a shop vendor, a supermarket needed just four persons for the same volume of produce handled. These supermarkets employed 1.2 workers per tonne of tomatoes compared to 2.9 persons employed in the traditional channel. This experience is in fact universal.


That the producer will get a better price because of these retail giants, is once again a myth. The CPI(M)’s note to UPA-1 mentioned a study that showed that a cocoa farmer from Ghana gets only 3.9 per cent of the price of a typical milk chocolate bar while the retail profit margin was around 34 per cent. A banana producer got around 5 per cent of the final price while 34 per cent went as profits for the retailer. Similarly, 54 per cent of the final price of a pair of jeans goes to the retailers while the manufacturing worker gets only 12 per cent.


Given the serious global economic crisis and double dip recession, international finance capital is looking for new avenues for its profits. The Indian retail market is a very lucrative option for it. This decision, will only permit profit-maximisation for international capital at the expense of the Indian people and Indian economy.


These are the realities that the Congress party and the UPA-2 government refuses to recognise and continues with a campaign of disinformation to mislead the people.  On the contrary, the running thread in all the three speeches was to blame the opposition for misleading the people. The PM said “Some people are trying to mislead the public”. Given the above facts, the people need to tell the PM that it is he and the Congress party who are misleading the country and the people. 


The simple fact is that at the expense of the vast majority of our people, the country’s resources and markets are being further opened up for loot and profit maximisation by international finance capital and Indian big business.  It is this policy trajectory that needs to be reversed and, thus, to `change the system’ in the interests of our country and people.  The speeches at this Congress rally must only redouble the people’s resolve to mount mightier struggles against this reform policy trajectory. 

(November 4, 2012)