People's Democracy

Editorial

Frenzied Push for Imposing Greater Burdens

ONCE again, there is a renewed effort by the pundits of neo-liberalism to push the government towards taking a course of greater liberalisation of India’s financial sector.  This is the only answer, according to them, to reverse the current slowdown of the Indian economy. 

No one can contest the fact that the Indian economy is experiencing a severe down slide.  The growth rate has dipped to the lowest in a decade.  Inflation and rise in the prices of essential commodities continues relentlessly.The index of industrial production, particularly manufacturing, has registered its lowest level in recent times.  The scarecrow nudging pushers of such reforms is the sensex that has now registered a 24 per cent fall from its highest level. 

To reverse this situation, the pen-pushers of such reforms claim that there is no other alternative for an economic revival.  The Times of India, in an editorial titled ‘No time to lose’ has used the recent Congress Working Committee meeting discussions as an endorsement for such a course by saying: “It’s swelling into an overwhelming chorus now”. 

As though it is taking the cue, the government has decided to revive an earlier cabinet note to privatise the pension funds. This Pension Fund Regulatory and Development Authority (PFRDA) was proposed to be legislated in 2004.  Due to the opposition by the Left parties, it could not see the light of the day as a legislation. It has now been introduced in the Parliament in 2011, with active support from the BJP. This opposition by the Left is based on the fact that by allowing foreign corporates to use these funds for their international speculative tradings, it would jeopardise the hard-earned savings of crores of employees and their future security.  Indeed, such an opposition turned out prophetic in the wake of the 2008 global financial meltdown. Crores of Indian employees would have been ruined if this Bill was passed in the parliament.   Likewise, the Left parties opposition to the Bills seeking to increase foreign financial participation in our insurance sector and giving the right to foreign banks to takeover Indian private banks contributed, in the main, to relatively insulate the Indian economy and its people from the devastating impact of the global economic crisis. 

It is precisely this shield, so to speak, that the Left parties opposition to these reforms created to protect the Indian economy is now sought to be demolished.  In the process, the UPA-2 government is seeking to appease international finance capital and India Inc. to the availability of greater funds in India that they can use for their speculative gains.  That such an access cannot be used for gains through material production is obvious from both the global recession and contracting domestic demand in India.  Hence, the only route available to maximise profits is to access greater resources for speculation.  International finance capital is pressurising  India to adopt such a course for seeking to reverse the downgrading of India’s credit ratings by international agencies. 

Hence, the pressures for such reforms including granting license to foreign airlines to pick up 49 per cent of capital in domestic airlines, which the UPA itself had opposed in the past.  This comes at a time when the Indian civil aviation sector is in a deep crisis primarily due to the extremely high prices of aviation fuel.  This is so in India because of the high taxation levels imposed by the government.  Instead of giving relief to the domestic airlines as well as, in a larger context to the economy, by reducing these taxes, the government continues to use the taxes on petroleum products as the milch cow for its revenues.  Instead of reducing taxes, the government is now willing to permit the inevitable takeover of domestic airlines, including the national carrier, by foreign airlines.  While all these reforms will enlarge profit maximisation, they do not  in any way contribute to the revival of the domestic economy in real terms.

These neo-liberal efforts for revival have seen the announcement of a supplementary Foreign Trade Policy on June 4.  Several sops have been announced, estimated at over Rs 1,200 crores, to promote India’s tumbling exports.  While India’s exports grew by 21 per cent in 2011-12, to touch $ 303.7 billion, they tumbled to a mere 3.2 per cent  this year, despite the severe depreciation of the Indian rupee.  Depreciation would make our goods cheaper in foreign lands which should normally increase their sales.  This, however, is not happening precisely because of the deepening global economic crisis and recession.  All indications suggest that the revival of the global economy  does not appear in sight.  Yet, this UPA-2 government  has adopted a seven point strategy to increase India’s exports, despite the recent sharp decline, to $ 360 billion from $ 303.7 billion! 

The revival of the Indian economy can only take place, as we have repeatedly argued in these columns in the past, by vastly enlarging the levels of domestic demand in our country.  This is currently being severely squeezed due to the relentless price rise and sharply widening economic inequalities.  This can be reversed only by banning all speculative trading in essential commodities and, importantly, generating large-scale employment through significant public investments in building our infrastructure.  As argued earlier in these columns, there is no dearth of resources for this, if only the massive tax concessions, which are larger than our fiscal deficit are stopped.

Strong and powerful popular people’s pressure must be mounted on the government to reverse its current reform trajectory and adopt a trajectory as suggested above to strengthen our economic fundamentals and provide our people with a better livelihood. 

(June 6, 2012)