People's Democracy

PART II OF THE POLITICAL ORGANISATIONAL REPORT

CPI(M)’s Approach On Certain Policy Matters - V

Sitaram Yechury

UNDER globalisation, the domestic ruling class governments in many developing countries adopt a set of policy prescriptions to dovetail domestic economies, under imperialist pressure, to the global interests of international capital. In the process, they adopt such policies which, as we noted earlier, result in the gradual withdrawal of the government from economic activity. This implies lower levels of state expenditures and consequently the state’s withdrawal from meeting its social obligations to the people.

The consequence of the lower levels of state expenditures is the direct fall in the levels of employment. State-funded projects, apart from building the required socio-economic infrastructure, also generate jobs on a massive scale. Additionally, the lowering of State expenditures mean also the downsizing of those currently employed in government offices, establishments and enterprises, thus, compounding the unemployment situation. The consequent lowering of the purchasing power in the hands of the people sets in motion a recessionary tendency in the economy. The economy may grow, but not at its full potential. In any case, the benefits of such growth remains confined to the small upper class sections while the livelihood of the majority of the people deteriorates.

In Indian conditions, this process has a direct adverse bearing on the economies of the various states that constitutes the union of India. This happens in various ways.

Firstly, the precipitation of recessionary conditions lowers the levels of economic activity thereby reducing the revenues generated through taxes imposed by the state governments (like sales tax etc). The reduction in the state governments’ income adversely affects its capacities to provide relief to the people.

Secondly, the overall reduction in the expenditures by the central government means that the central transfers to the state governments (for instance, transfers under the plan expenditures) reduces sharply. This compounds the plight of the state governments already suffering from reduced revenues.

Thirdly, the central government, in order to bolster its own revenues, charges extremely high interest rates on loans given to the state governments. On many occasions, the central government raises resources at lower rates of interests and advances them as loans to the state governments at much higher rates of interest. This is done even with small savings loans raised within the states themselves at much lower rates of interest and transferred to the centre! The effective interest rate paid by the state governments increased from 8.96 per cent in 1992-93 to 10.61 per cent in 2002-03. This further reduces the revenues of the state governments.

Fourthly, as noted earlier, under globalisation, there is the spread of acute agrarian distress. This, we see in our country manifesting itself in the growing reports of starvation deaths and distress suicides. Investigations have shown that much of the distress suicides are taking place because the peasantry is being placed increasingly at the disposal of usurious moneylenders in the absence of loans provided by financial institutions and banks. This acute agrarian distress, further, compounds the recessionary conditions in the economy with a sharp fall in rural demand. This has been reflected in the sharp decline in the per capita availability and absorption of foodgrains which fell from 177 kg/year in 1991-92 to 155 kg/year in 2001-02.

Further, under the pressure of neo-liberal economic policies, whose primary objective is to sharply increase the levels of profit, the tendency of the central government is to continuously reduce the direct taxes (mainly to benefit the corporates and rich sections) in the country. The series of budgets that have been presented annually since the adoption of liberalisation reforms in India have seen a bonanza for the rich being doled out in terms of direct tax reduction. The central government tries to make up a part of the consequent reduced tax revenues by increasing indirect taxes. Direct taxes are taxes that are imposed mainly on the rich. On the other hand, indirect taxes are taxes that are inevitably passed on to the consumer through higher prices. Thus, the rich, under globalisation, receive bonanzas or subsidies in terms of tax concessions while the poor are burdened further through higher indirect taxes.

While this, in general, is anti-people, it impacts on state revenues as well. Much of the central tax revenue that is shared with the states falls in the realm of direct taxes. Any reduction in the central direct tax revenue quantum means a corresponding decline in the states’ share of the central taxes. The states share as a per cent of GDP fell from 2.86 in 1997-98 to 2.29 in 2001-02. Thus, the states’ revenues decline further during this period for this reason as well.

There has been a constant and continuous struggle by all the states seeking a greater share of the central tax revenue. Ideally, while central government keeps 50 per cent of such revenue, the rest of the 50 per cent ought to be transferred to the states. Currently, however, less than 30 per cent is transferred to the states. All the states, unanimously, are bargaining with the central government to at least increase this to one-third of the total share of the tax revenue. This has not been accepted so far and this issue constitutes an important element in the equitable restructuring of the centre-state relations in India.

All these factors put together have drastically reduced the revenues of state governments in our country. The revenue deficit of all states as a per cent of GDP has increased from 1.21 in 1997-98 to 4.39 in 2001-02. This is universally true of all states irrespective of the ruling party in any state.

It is only natural that, under these circumstances, the state governments are reduced to extreme penury and find it difficult to meet their day-to-day expenditures leave alone undertake programmes for the welfare of the people. The CPI(M)-led state governments – currently in West Bengal and Tripura – naturally also function under these constraints.

These governments, on the other hand, constitute an important part of the CPI(M)’s political struggle for the establishment of people’s democracy in India. The Political Organisational Report of the 18th congress notes: "These CPI(M)-led governments have come into existence and have survived against all odds as a result of years of massive arduous and dedicated struggles by the masses under the leadership of the Party and its committed cadres, hundreds of whom lay down their lives in the process. These governments constitute the outposts of the Indian people’s struggle for better livelihood and for an eventual social transformation. Defending these governments in West Bengal and Tripura and the vantage position in Kerala is the absolute prime task of every Communist, of everybody ranged against imperialist globalisation".

These governments, existing in present conditions, function in a situation where the Indian Constitution provides little autonomy to the state governments to implement any alternative economic and industrial policies which are the prerogative of the central government alone. These governments, therefore, are forced to face a situation when their desire to improve the welfare of the people is thwarted by the decreasing revenues of the state government. The consequent discontent among the people, whose expectations have risen high precisely because the CPI(M) leads these governments, is utilised by the ruling class parties to sharpen the political struggle against these CPI(M)-led state governments. While explaining to the people the conditions in which these state governments are constrained in not being able to provide relief to the people and improve their livelihood in accordance to its wishes, the CPI(M) seeks its best to protect the people’s interests from the onslaughts of globalisation.

In this context, it must be understood that the very existence of these governments is an expression of class struggle. Prior to every elections, in West Bengal, there are engineered murderous clashes that takes place between the CPI(M) and the ruling class political parties like the Trinamul Congress. Even while being in power in the state for nearly three decades, the CPI(M) has lost thousands of its comrades who have been martyred in such struggles. At the superficial level, what may appear as a clash between political rivals actually masks the real class battle taking place in rural Bengal today. The murderous assaults mounted against the CPI(M) in the run up to the last assembly elections in West Bengal whose centre stage became the Midnapore district illustrates the point.

Following the successful implementation of land reforms, prior to every elections to the state Assembly in West Bengal, the former landlords and landed vested interests mount attack to recapture the lands that they once held illegally. In the process, they seek to terrorise, if not annihilate, the poor landless who today hold the legitimate ownership, thanks to the state government’s implementation of land reforms. These former landed vested interests mount such attacks with the hope that the terrorised rural population will not vote for the CPI(M) and, hence, will keep it away from forming and leading the government.

This, the landed vested interests hope, would facilitate their return to capture and illegally hold the land they had formerly held. Winning elections and the CPI(M) being returned to head the state government means the protection of the legal rights of the poor that, in the first place, were earned through such murderous battles which brought the CPI(M)-led West Bengal government into existence.

Likewise, in Tripura, prior to every elections, ethnic clashes are fomented by the ruling class parties often aligning with anti-Indian extremist outfits who mainly operate from outside of Indian territory. Here again, the motive is to terrorise the local population, mainly tribal, in order to defeat the CPI(M) in the elections and, thus, reverse the gains made under the CPI(M)-led Left Front rule.

Under these circumstances, the defence of these governments, apart from many other things, like the projection of a morally corrupt-free efficient administration as compared to the ruling class parties led state governments means the sharpening of the class struggle in these areas.

However, under globalisation, facing the severe financial constraints, these governments have to seek alternative sources of revenues to at least partially meet the desired objectives for improving people’s welfare and providing employment opportunities.

In this background arises the question whether these state governments can accept loans/grants from international agencies. This is particularly in the context where the people in these states expect these governments to protect and advance their interests without succumbing to imperialist blandishness and resist the pressures of neo-liberal economic policies.

The Political Organisational Report clearly states that the CPI(M)-led governments can accept such loans/grants on the basis of the following three conditions:

The acceptance of such loans/grants does not, in any way, adversely affect the Party’s struggle against imperialist globalisation;

Such loans/grants do not entail any structural adjustment conditionalities; and

· The state governments must take the people in the confidence and explain to them the justification for taking such loans/grants.

It is on this basis that the Political Organisational Report states: "The CPI(M)-led state governments have to function under constraints, including those imposed by imperialist-dictated policies at the Centre, which the Party fights to overcome. The Party’s fight against such policies, therefore, is simultaneously a defence of the interests of our state governments. Whenever our governments hard-pressed for funds but duty-bound to provide relief to the people are offered loans by imperialist agencies and western governments, the Party should consent to such loans only if it does not weaken its fight against the imperialist-dictated policies. In all cases, where the Party agrees to such loans from international agencies like World Bank, ADB, DFID, JBIC etc, it must take the people into confidence and explain to them the justification for taking such loans."

Further, "…..In no case should we go in for loans which involve structural adjustment programmes. Such programmes entail conditionalities like privatisation of certain sectors, downsizing staff, cutting subsidies and fiscal conditionalities."

The West Bengal state government has so far accepted loans from such international agencies which are primarily known as ‘stand alone’ loans, i.e., meant for specific projects and which do not have any structural adjustment conditionalities. In this context, it must be recollected that some years ago, the World Bank was negotiating with various state governments, including West Bengal, for the granting of developmental loans. The then West Bengal Chief Minister, Jyoti Basu, was offered one such package by the World Bank. However, when the World Bank demanded to be shown the forthcoming budget for state with the obvious intention of wanting to be "consulted" on the same, Jyoti Basu and the West Bengal government refused to do this. The budget prepared by the government is a secret document till it is presented to the Parliament/Assembly. This cannot be breached in the name of negotiating loans from the World Bank. The World Bank, naturally, refused to proceed with giving loans to West Bengal since the state government did not allow it to be a part of its budget preparation process.

Obviously, some other state governments agreed to such World Bank conditions. Andhra Pradesh, under the Telugu Desam Party rule, was one of them. This resulted in secret documents for the economic restructuring of Andhra Pradesh. As anticipated by the CPI(M), within a couple of years, Andhra Pradesh was drawn into the vortex of huge mortgaging of state resources while imposing crushing burdens on the people through the policies of structural adjustments like privatisation, removal of subsidies etc.

Likewise, today the CPI(M) may be in the midst of a struggle in Orissa opposing the state government’s succumbing to pressures from international agencies like DFID to accept structural adjustment programmes. Some may ask, if the CPI(M) is opposing the DFID loan in Orissa, how can a CPI(M)-led state government in West Bengal accept a loan from the same agency?

The moot point to understand here is the following: while the source of the loan may be important, what is more important is the terms on which this loan has been accepted by the state government. While the Orissa government, or, the former Andhra Pradesh government may accept loans succumbing to the pressures of imperialist agencies, the West Bengal government has clearly declared that no loan/grant will be accepted by the government which has any structural adjustment conditionalities involved. What is important, therefore, is to examine the terms on which these loans are being accepted. To repeat, no loans/grants which jeopardise the CPI(M)’s struggle against imperialist globalisation; which carry structural adjustment conditionalities and which are concluded secretly without being transparent before the people regarding the conditionalities or the purpose of such loans are acceptable to the CPI(M) or the state governments led by it.

Once again, as noted earlier, many of the conclusions arrived at in this section of the Political Organisational Report are not only guidelines for the Party to adopt a uniform policy on these matters but are also slogans of action for popular mobilisation. The struggle in various states to force the state governments to accept loans/grants from international agencies only on the basis of the three conditions that we stated above must be a focal point of popular mobilisation of the people in the defence of our country’s economic sovereignty and people’s livelihood. It is through the strengthening of such struggles that we would be able to strengthen the revolutionary movement which eventually seeks the social transformation of our country.