People's Democracy

EDITORIAL

Force The Govt To Change Tack

THE coordination committee of the UPA, government and the Left parties met on October 4, 2006 for a detailed discussion on the note submitted by the Left parties on the two years of the UPA government. Amongst the various issues that were raised in this note (published in People’s Democracy June 18, 2006 issue), the direction of the economic policies of the UPA government was discussed. The Left parties had stressed the need to sharply increase public investment particularly in the agricultural sector. For this, the Left parties have suggested various additional avenues for resource mobilisation which include the introduction of a long term capital gains tax and an inheritance tax. The Left parties also sought review of various tax exemptions that are being doled out on one pretext or the other. During the first three budgets of this government the Gross tax revenues have been growing at over a 20 per cent rate. While this is commendable there is a scope for further increasing government revenues so that the required public investment can be undertaken. This however, would require a change in the direction of the economic policies pursued by the UPA government.   

The deepening agrarian crisis requires urgent intervention by the central government. The packages announced by the prime minister and the finance minister have not made any dent in the spate of suicides being committed by our farmers. The Left parties pointed out that unless massive investment is made to increase the levels of irrigation, which currently stands at 34.8 per cent of all arable land, true and complete self-sufficiency in food cannot be achieved. The production of foodgrains has at best stagnated if not declined during the decade and half of liberalisation policies. What is worse is that the per capita availability and hence consumption of foodgrains has drastically reduced in this decade and a half. While it stood at 510 gms per head per day in 1991, it declined to 417 in 2001. The agricultural sector shows negative growth rates in some of the subsequent years, hence the decline by now should be substantially larger. Clearly, unless something is done urgently, India’s food security itself can come under severe jeopardy.  

The Left parties suggested that the government must immediately ensure the availability of institutional credit to our farmers. Debt and mortgage have been identified as the major causes leading to peasant suicides. Though, in the last two years of the UPA government the amount of agricultural credit has doubled, even today less than 40 per cent of our farmers are able to access institutional credit. The vast majority have to depend on the local usurious moneylender. The inability to repay these loans and the exorbitant interest rates that accompany them is the main reason behind the suicides. The Left parties have urged the UPA government to address this issue with utmost urgency.  

Secondly, the inability of the farmer to get a guaranteed minimum price for his produce is another factor contributing to indebtedness and leading them to bankruptcy and hence the resort to suicides. The Left parties have urged the UPA government to guarantee a reasonable minimum support price so that the farmer may be protected from the vagaries of the market.  

Concerning the question of food security, the Left parties underlined the need to strengthen the public distribution system in the country. The UPA government’s attention was drawn to the fact that in many states the BPL cards are yet to reach the deserving and needy sections. Adequate foodgrains through the PDS are not being provided. This is so because the government’s procurement of foodgrains has drastically reduced. Admitting this, particularly in the case of wheat, the government informed that the decision to import wheat had to be taken under these circumstances. This situation has to be urgently corrected in the coming season by procuring adequate foodgrains required for a proper functional public distribution system so that the families below the poverty line can be ensured of required foodgrains and essential commodities.  

The Left parties highlighted the need to prohibit futures and forward trading in essential commodities as the necessary prerequisite to contain the present spiralling price rise. Speculative profits in the trade of essential commodities has been the single largest contributor for the current inflation. While not prohibiting such a trade the government informed the Left parties that the margins on such trades have been increased in order to curtail speculation.  

The Left parties reiterated their opposition to increase in the cap on foreign direct investment (FDI) in the insurance sector. Similarly, the Left parties objections to the proposed legislation on the pension bill and amendments to the Banking Regulation Act of 1949 were reiterated.  

Under pressure from the Left parties, the UPA government has put on hold all privatisation of public sector undertakings. Even the proposals for disinvestment have been put on hold. However, as stated in the CMP, public sector units may reach out to the financial markets to raise resources through the issuing of shares to meet requirements of the units’ expansion and further growth.  

The Left parties called upon the UPA government to uphold its assurance that the modernisation of Kolkata and Chennai airports along with the modernisation of 35 non-metro airports will be undertaken by the Airports Authority of India (AAI). The UPA government on its part had said that as far as Kolkata and the 35 non-metro airports are concerned they would be modernised by the AAI. On the question of the Chennai airport, the opinion of the state government was sought. The Left parties however reiterated their position that the modernisation of the Chennai airport should also be undertaken by the AAI.  

On the liberalisation of the financial sector the Left parties reiterated their opposition to the efforts being made to move towards the full capital account convertibility of the Indian rupee. This will only expose India to the vagaries of international finance capital which is in search of predatory speculative profits. The UPA government has informed that the issue was being examined only and no such decision has been taken. Keeping in view the need to protect the Indian financial system from the flows of speculative capital, the Left parties called for the institutionalisation of effective regulatory authorities.  

A detailed discussion on the UPA government’s foreign policy took place. While the government maintained that they were adhering to an independent foreign policy as defined in the Common Minimum Programme, the Left parties highlighted the recent departures which have patently been undertaken under pressure from US imperialism. 

The meeting also decided that the women’s reservation bill should be introduced in the coming winter session of parliament. 

The Left parties will continue to mount pressure both within the parliament and outside through mass mobilisations so that the promises made in the CMP are implemented. A long way has to be traversed to achieve the targets of spending six per cent of the GDP on education from the current 2-3 per cent and three per cent of the GDP on public health from the current 0.9 per cent. The entire expenditure currently being made in areas of rural development, employment generation etc aimed at improving people’s welfare is a woeful 2.75 per cent of the GDP today. This has to increase vastly if the assurances of the CMP are to materialise. Through strong public pressure this UPA government must be made to shift the direction of the economic policies towards fulfilling the CMP promises and thus improving people’s welfare. The thrust of the economic policies must shift from the current sole preoccupation with bolstering corporate profits towards improving people’s welfare.