People's Democracy

Editorial

Mount People’s Offensive Against

This Economic Policy Direction

THE UPA-II government, despite all indicators of economic activity showing a decline, continues to adhere to its trajectory of neo-liberal economic reforms. In the hope of attracting an increased flow of foreign capital, the liberalisation drive appears to be stepped up in the run-up to the forthcoming annual budget.  That such a flow of foreign capital cannot happen given the further deteriorating economic crisis globally does not seem to be factored in by the government.  Its concerns are to portray India as an `emerging economy’ that is willing to play host to foreign capital, in the latter’s hour of intense crisis, to come and reap super profits from India at the expense of the Indian people. 

Reports indicate that during the first week of February, the government is preparing to sign the Free Trade Agreement (FTA) with the European Union (EU).  That the EU is in the grips of a severe crisis that is threatening the very existence of the Euro is there for all to see.  This FTA with EU is designed to open up the Indian markets for the profit starved European capital and particularly its highly subsidised agricultural and dairy products to flood Indian markets.  This will doom the Indian peasantry and our agricultural economy which is already in the throes of a deep distress.  At a time when government agencies themselves are not paying the farmers the declared minimum support price, forcing them to enter into distress sales, such opening up of our economy will only result in heaping greater agony on our farmers pushing up the already escalated rates of distress suicides.  The result of the FTA with the ASEAN countries has shown how disastrous its impact has been on the producers of cash crops, particularly in Kerala. 

The prime minister has made it very clear that opening up India’s retail trade sector to foreign investment will be done soon after the current round of assembly elections.  Once again, this will increase the avenues for profit maximisation to beleaguered international finance capital at the grave expense of ruining the livelihood of four crores (20 crores including their families) of Indians currently employed in this sector.  Similar access to foreign capital in our insurance and banking sectors are on the anvil.  The BJP colluded with this UPA government in passing the PFRDA bill in parliament thus paving the way for the privatisation of pension funds of a staggering amount of lakhs of crores.  While ruining the future security of crores of employers, this will only place these huge funds at the disposal of international finance capital for its speculative profit maximisation. 

Another excuse offered by this UPA government for seeking foreign capital is that its inflow will ease the burgeoning fiscal deficit.  As argued in these columns in the past, if the tax concessions given to the corporates and the rich are withdrawn, then the fiscal deficit would simply cease to exist.  Such tax concessions have only allowed the rich to become richer and ballooned the number of US dollar billionaires in India who together hold assets equivalent to over a third of our GDP.  Clearly, therefore, the government’s policy trajectory is designed to facilitate profit maximisation to foreign capital and Indian big business at the expense of declining livelihood status of the vast mass of the Indian people. 

Further, in the name of curtailing this growing fiscal deficit, the government is most likely to further slash the already meagre social sector expenditures in the coming budget.  In this effort to cut back governmental expenditures, lakhs of vacancies continue to remain unfilled in many departments mainly the railways.  While there is a talk of trimming India’s so-called huge bureaucracy in order to cut expenditures, the reality is, as shown by recent studies that India has one of the lowest per capita public servant ratio in the world.  These studies show that as compared to a little over 1600 government servants (both central and state) for every one lakh citizens, the USA has 7,681, i.e., nearly five times more.  If the railways are separated from this, then the figure falls drastically to only 125 central government employees per lakh population as against nearly 800 per lakh federal government employees in the USA.

Clearly, India does not have the required manpower to meet the basic needs of the people in the social sectors, or, for that matter to man our internal security.  India has a third of the UN recommended ratio of policemen to population.  The universal provision of education, health care, food security depends critically  on the delivery systems. While there is legitimate concern over the siphoning off of funds in all developmental projects and social services (Rajiv Gandhi’s famous remark that less than 15 paise of every rupee spent by the government reaches the people), the fact is that there are just not enough personnel to deliver even the existing minimal services to the people.  What is needed is to vastly increase the manpower required to meet the socio-economic needs of the people in the basic sectors like health, education, food security etc. Instead, the government is contemplating to further reduce these numbers in the name of curtailing fiscal deficit. 

The vast majority of the Indian people are, therefore, doomed by this double pincer attack.  On the one hand, the economic policies of liberalisation enlarges super profits for foreign and Indian big business while  impoverishing a vast majority of our people, on the other, even the minimal required manpower  to deliver whatever little services and public utilities that exist to the people are going to be further  reduced. 

Under the dispensation of these neo-liberal economic reforms, the government is increasingly playing the role of facilitating profit maximisation for foreign and Indian big capital while abdicating its constitutional responsibility to provide all our people with basic needs. 

As noted in these columns in the past, there is no dearth of either capital or manpower in our country.  If the massive loot of our resources through mega corruption scams are prevented and the concessions given to the rich are instead used to increase the levels of public investments to build our much-needed socio-economic infrastructure, then India can meet the basic needs of all our people while increasing their livelihood status through the generation of higher employment.

“We, the people” of India have both the potential and the resources for creating a better India.  Powerful public pressure needs to be mounted to force this UPA government to abandon its strategy and direction of economic policies in order to achieve what we are capable of and what we are entitled to.

(February 01, 2012)