Class Bias In Legislation

Prakash Karat

THE UPA government has introduced two bills in parliament which cannot be supported by the CPI(M) and the Left parties. The first bill seeks to provide a legal backing for the new contributory pension scheme in place of the “defined benefit scheme” for central government employees. The Pension Fund Regulatory And Development Authority Bill would enable this scheme to be extended to state government employees and other sectors of the work force who are entitled to pensions. The CPI(M) and the Left parties opposed the introduction of this bill in the Lok Sabha. Earlier, the government had promulgated an ordinance to set up the regulatory authority without any consultations with either the Left parties or the trade unions.

The CPI(M) has opposed the switch over to the new pension scheme as it is meant to change the nature of pension as a social security benefit and make available pension funds for investment in the equity market.

The new pension scheme was announced by the BJP-led government and notified with effect from January 1, 2004. Central government employees entering service from this date onwards have to make a monthly contribution of 10 per cent of their salary and dearness allowance which will be matched by the central government. The Pension Fund Regulatory Authority would decide which are the pension fund managers who would have access to the pension funds for investments. The three schemes which are provided for the employees to opt for, all require some degree of investment in equity in the stock market. According to the chairman of the Interim Pension Fund Regulatory Authority there will be one public sector company and five private sector companies including foreign ones who will manage the fund. The employees opting for schemes where greater equity investments are involved will have to face the risk of losing their lifetime contribution if their pension funds do badly in the stock market.

This bill is to facilitate the privatisation of pension funds which is being pushed for by international finance capital and the neo-liberalisers. The Left parties have written to the prime minister announcing their intention to oppose the bill if it is proceeded with. Right now, the bill has been referred to the standing committee for the ministry of finance.

The second bill which has been cleared by the cabinet for introduction in parliament is the Banking Regulation Amendment Act. This amendment seeks to do away with Section 12 of the Act which provided for a voting rights cap of 10 per cent on the shares held in private sector banks. This amendment is being made in line with the UPA government’s decision to go ahead with allowing foreign direct investment in Indian private banks upto 74 per cent. The BJP-led government had on March 5, 2004, on the eve of the Lok Sabha elections issued a notification which raised the FDI limit under the automatic route. Prime Minister Manmohan Singh had on his first visit to New York announced the commitment of the UPA government to implement the 5th March 2004 notification. It is to facilitate the FDI acquisition of Indian private banks that the cap of 10 per cent voting right is being proposed to be removed.

The Left parties had submitted a note to the UPA-Left coordination committee in February 2005 spelling out their opposition to the proposal to enhance the FDI cap in the banking sector. The CPI(M) is opposed to moves to further deregulate the banking sector for a number of reasons. Deregulation of the banking sector, which is a vital component of financial liberalisation, greatly enhances the scope of speculative activities and exposes the financial system to the risks associated with volatile capital flows. In India we have seen the example of the Global Trust Bank and the Nedungadi Bank which are a warning of what can be expected if reckless deregulation of the banking sector is carried out. The Reserve Bank of India has repeatedly stressed on diversifying ownership of banks and this is why the guidelines issued by the RBI in July 2004 chose to be extremely cautious about the further opening up of the banking sector and allowing domestic or foreign investors to acquire a large share holding in any bank and exercise proportionate voting rights.

The CPI(M) also does not accept the argument put out by the finance minister in parliament that hiking the foreign equity cap in banking would create “an enabling environment” for higher FDI cap leading to “infusion of new technology and management practices” resulting in “enhanced competitiveness”. The raising of the equity cap need not ensure higher FDI inflows nor necessarily imply infusion of such technology and management practices that are beneficial to the economy and the people. Rather than enhance competition, it may curb it, especially when a regulatory framework meant to ensure diversified ownership is diluted to pave the way for foreign banks to acquire Indian banks through creeping acquisition. What the UPA government is proposing is to let foreign banks take over Indian private banks in the name of infusion of capital into weak private banks. There are a number of Indian private banks which will be subject to take over by large foreign banks. If there are any private banks which are in trouble they can be taken over by public sector banks. Several public sector banks have expressed their desire to acquire another bank.

The CPI(M) cannot be party to any move to facilitate the takeover of Indian private banks by foreign banks. Therefore, the Banking Regulation Amendment Act will be opposed on the floor of the House whenever it comes up for consideration.

As the budget session of parliament ends, it is to be noted that the UPA government has failed to take up bills and pass legislation which are important for large sections of the people. The Rural Employment Guarantee Bill could not be adopted in the current session because of the inability of the standing committee to process the bill given the boycott of parliament and all the standing committees by the BJP. Even before the boycott by the BJP, the government had not shown any seriousness in fulfilling the commitment made in the CMP to provide for 100 days minimum work to one adult in every rural household. The bill had diluted various important aspects of the employment guarantee scheme. The other bill which is vital for millions of tribal people and forest dwellers was the Scheduled Tribes and Forest Dwellers (Regulation of Rights) Bill. The union cabinet did not take up this bill for presentation in parliament even though it was scheduled to do so. This bill was meant to secure for adivasis and forest dwellers the right to live and pursue their livelihood in the forests. The failure to introduce this bill has caused great disappointment and is seen as a failure to live up to the commitment made in the Common Minimum Programme to the tribal people for their right of access to the forest.

The food-for-work programme which was announced by the UPA government in November 2004 is now in operation in 150 backward districts. It is reported that Rs 50 to 100 crores have been provided in each district depending on the size of the population for the programme. The Party has decided to ascertain how far this programme is being implemented and whether funds and the foodgrains stocks are being properly utilised. Given the past experience there is genuine concern that the benefits of such programmes do not reach the people due to systemic corruption and siphoning off of funds. The reports of how BPL stock of foodgrains have been sold off in a multi crore scandal in certain districts of Uttar Pradesh and the scandal of the pocketing of flood relief fund in Bihar which has surfaced recently, illustrate the problem. The UPA government should not cite such examples to justify the scaling down of such programmes addressed to the rural poor. It should instead initiate firm action to crack down on diversion of food stocks from the PDS and the misuse of funds in the rural development and employment generation schemes.

The record of the legislation taken up in the budget session of parliament confirms what the political resolution of the 18th congress has stated with regard to the UPA government.

“The UPA government has shown itself eager to fashion policies favourable to big business and international finance capital while being tardy or negligent in protecting the interests of the working class and the working people.”

While the UPA government completes one year in office it will be advisable for the leadership of the UPA to ponder over this bias.