People's Democracy

Editorial

Reorient Economic Policy Direction

ON the eve of our 62^nd Republic Day, the president of India, in the customary address to the nation, renewed “the pledge to empower the poor and the marginalised sections of our population so that they too can become a part of the growth story of our nation”. 

Almost simultaneously, the leaders of India Inc and senior officials of the government who advise and manage our economic policies spoke in terms of  rolling back even the existing support that is provided to the poor and the marginalised at the World Economic Forum in Davos, Switzerland. 

The contrast could not have been more stark.  This reflects a fundamental contradiction set in motion during the birth pangs of our Republic. Presenting the draft of our constitution to the constituent assembly, Dr B R Ambedkar had warned of this very contradiction.  It is well worth recollecting, once again, what he had said on November 25, 1949:

“On January 26, 1950, we are going to enter into a life of contradictions. In politics we will have equality and in social and economic life we will have inequality. In politics, we will be recognising the principle of one man-one vote and one vote-one value. In our social and economic life, we shall by reason of our social and economic structure, continue to deny the principle of one man-one value.

“How long shall we continue to live this life of contradictions? How long shall we continue to deny equality in our social and economic life?

“If we continue to deny it for long, we will do so only by putting our political democracy in peril. We must remove this contradiction at the earliest possible moment or else those who suffer from inequality will blow up the structure of political democracy which this Assembly has laboriously built up.”

It is not that India Inc and their governmental spokesmen in Davos are oblivious  of this glaring contradiction that continues to intensify even after six decades.  Simply put, they are brazen in pushing the government to create greater avenues for profit generation even if it means impoverishing the vast masses of our people. 

The deputy chairman of the Planning Commission has called for reform of the labour laws articulating corporate India Inc’s demand for unbridled `hiring and firing’ policy.  Even the little social and economic security that is provided by our existing laws are sought to be abolished.  This, apparently, is a necessary pre-condition to accelerate industrial growth.  The latter, we are told, is imperative to create employment.  In other words, we are being told that by making an `employed’ worker `unemployed’ today, future employment would be generated.  It is only such `corporate brazenness’ that seeks to continuously fool the people this way.  Plain and simple, changes in the labour laws are required to enlarge profits at the expense of intensified exploitation and misery of the vast mass of people. 

One of the economic advisors to the prime minister of India has openly called for the virtual withdrawal of all subsidies and a complete stop of all social welfare expenditures, including the government’s much touted Rural Employment Guarantee and Bharat Nirman.  Particular reference was made to remove all subsidies on petroleum products and eliminate the fertiliser subsidy.  This, we are told, will take care of our fiscal problems.  Plain and simple, again, the objective is to divert whatever little amount of resources that are now providing some relief to the people towards avenues that will enlarge private profit. 

While brazenly seeking to exclude the vast mass of Indian people from the so-called `Indian growth story’, the cheer leaders of neo-liberalism remain completely silent, deliberately, regarding the subsidies provided to the corporate sector and high networth individuals.  Revenue foregone by the government of India, as revealed in the budget documents presented to the parliament in February  2010, as a per cent of aggregate tax collection was 68.59 in 2008-09 and as high as 79.54 in 2009-10.  This means that in the last fiscal year, an amount equal to nearly four-fifth of the tax revenue of the government was not collected from this sector implying, a huge subsidy.  In absolute terms, the tax foregone under corporate income tax and personal income tax alone amounted to Rs 1,04,471 crores in 2008-09 and Rs 1,20,483 in 2009-10.  In other words, nearly 2.25 lakh crores of rupees, which should have constituted the legitimate revenue of the government, was consciously foregone.  Instead, if these resources were collected and used for public investments, this would have built our much needed infrastructure while generating substantial employment improving people’s livelihood.  The consequent growth of domestic demand would have laid the foundations  for better economic fundamentals for a sustainable growth trajectory. India Inc, however, in its urge to seek quick super profits cries for further concessions by imposing further miseries on the people. 

Such massive concessions for the rich are, however, called `incentives’ for growth.  Concessions for the poor and needy are always called `subsidies’ which are bad for the economy and growth. 

Such brazen espousing of making a miniscule part of India more `shining’ at the expense of the vast majority of our people is, simply, not acceptable. 

The only pledge that needs to be renewed forcefully, today, is to heed Baba Sahib Ambedkar’s warning and radically reorient our economic policy direction away from the discredited and misery imposing neo-liberal reforms. Needless to add, the people need to re-double the resolve for creating a better India through mightier popular struggles. 

(January 27, 2011)