Debating India

UPA

A step forward

Venkatesh ATHREYA

Friday 18 June 2004, by ATHREYA*Venkatesh

Although the Common Minimum Programme does not make a clean break with the set of economic policies that have been repeatedly rejected by the people in every election held since 1991, it is a welcome first step forward in the process of building a confident, democratic and socially and economically modern and just society.

THE Common Minimum Programme (CMP) of the Congress-led United Progressive Alliance (UPA), released on May 27, 2004 - exactly 40 years to the day Pandit Jawaharlal Nehru passed away - represents, in part, a return to some of the goals that Nehru had held dear. It constitutes a step forward in the process of building a secular India, which is also more socially and economically inclusive than has been the case in recent years. While it does not fully reflect the meaning of the electoral verdict of 2004, insofar as it does not make a clean break with the set of economic policies that have been repeatedly rejected by the people in every election held since 1991, it nonetheless recognises that these policies have not addressed the needs of significant sections of the population and seeks to make partial course corrections. Being a document of a coalition of parties, it reflects the political give-and-take inevitable in such an arrangement.

The CMP advances six basic principles of governance, which are welcome and unexceptionable. These include:

- Preserving, protecting and promoting social harmony and resolutely opposing communalism.

- Ensuring sustained, employment-oriented economic growth.

- Enhancing the welfare of farmers, agricultural labourers and workers.

- Empowering women and promoting gender equality.

- Ensuring equality of opportunity for socially disadvantaged groups and religious minorities.

- Unleashing creative energies and promoting productive forces.

The CMP recognises the damage done to the pluralist and secular nature of Indian society and its key institutions by the onslaught of fundamentalism and obscurantism of various hues and by the active promotion of religious fanaticism in pursuit of political advantage in recent years. Its commitments in this regard by the reiteration of the secular principles that have been the bedrock of our multi-ethnic, multi-religious and multi-lingual nationhood, and its upholding of a secular polity are most welcome. Its restatement of the commitment to the letter and spirit of Article 370 of the Constitution pertaining to the special status of Jammu and Kashmir and the specific attention paid in the CMP to the educational and other needs of the minorities should go a long way in addressing the genuine concerns of the minorities in the current political conjuncture without in any way pandering to minority communalism.

The CMP makes an effort to address the issue of social exclusion characteristic of India’s growth path in recent times when it spells out its commitments to disadvantaged classes and social groups, including farm workers, farmers, other workers especially in the unorganised sector, Scheduled Tribes and the Scheduled Castes, the backward classes, women and minorities. Its attention to agriculture, education and health will be welcomed by all. These are sectors that have been badly affected during the decade and more of mindless pursuit of policies of liberalisation, privatisation and globalisation (LPG). However, there is room for concern over the policies proposed in the CMP to address some of these issues.

The CMP contains welcome corrections to the foreign policy pursued by the National Democratic Alliance regime, which bordered on servility to the sole superpower and acquiesced in its efforts to ensure its global domination through unilateral actions, including the invasion of sovereign countries and colonial occupation. The CMP’s commitment "to promote multipolarity in world relations and oppose all attempts at unilateralism" is timely. The explicit commitment to "the cause of the Palestinian people for a homeland of their own" is also most welcome. Its assertion that "... the UPA government will maintain the independence of India’s foreign policy position on all regional and global issues" as well as its emphasis on promotion of closer ties with the South Asian Association for Regional Cooperation (SAARC) countries, China and Russia are consistent with India’s national interests. While there may be diplomatic reasons for the reference in the CMP to the pursuit of closer engagements and relations with the United States, it needs to be underlined that the current U.S. foreign policy has been exceptionally aggressive and based on the unacceptable premise of the U.S.’ right to intervene militarily anywhere in the world if it perceives a threat to its interests.

While the need to meet commitments made to the World Trade Organisation (WTO) as on date may be unavoidable, this does not and should not preclude serious efforts to renegotiate several existing treaty obligations under WTO, which are patently unfair to the Third World, the agreement on intellectual property rights being a case in point. There is a need in this context to build on and strengthen the solidarity among Third World countries, particularly India, China, Brazil and South Africa, which was demonstrated in the Cancun Ministerial meeting of the WTO. It is worthy of note that the CMP does make a reference to this aspect.

ONE of the positive features of the CMP is its explicit promise to repeal the dreaded Prevention of Terrorism Act (POTA). The abrogation of basic democratic rights in the name of fighting terrorism cannot be countenanced. There are enough laws in the country, which, if implemented without fear or favour, will be far more effective than legislation such as POTA that lead to arbitrary actions and gross misuse of powers by undemocratic governments.

On another important aspect of the exercise of democratic rights, the CMP has made the commitment that "... the right to strike according to law ...will not be taken away or curtailed", although it has not spoken of bringing in legislation to protect the right to strike, which was felt necessary by almost all workers’ organisations cutting across political lines.

On economic issues, the CMP makes a promising beginning by focusing on employment, food, nutrition security, agriculture and rural credit. One of the key negative features of the economic policy and performance of the decade and more of "economic reforms" of the LPG variety has been the extremely slow growth in employment in general and rural employment in particular. Between 1993-94 and 1999-2000, rural employment grew at an abysmal rate of 0.66 per cent per annum, while the overall rate of growth of employment was around 1 per cent per annum. Verdict 2004 has confirmed that things did not get any better since 1999. It is therefore appropriate that the CMP has laid emphasis on employment as an important policy objective, and one that will not be automatically ensured by growth per se. Its explicit commitment to "... provide a legal guarantee for at least 100 days of employment, to begin with, on asset-creating public works programmes every year at minimum wages for at least one able-bodied person in every rural or urban poor and lower-middle class household" and its assurance that, "in the interim, a massive food-for-work programme will be started" represent an important break with the policies of the past.

Another key negative feature of the "economic reforms" period has been the stagnation in agriculture and the decline in the rate of growth of foodgrain production to levels below the rate of growth of population for the first time since Independence. Ironically, despite the slower growth of foodgrain production, the "reform policies" ensured that India would end up with huge stocks of unsold foodgrain in public godowns, even while a significant proportion of the population suffered from chronic hunger. It did this by raising the prices of foodgrain supplied through the public distribution system (PDS) and by depriving access to these foodgrain for a large segment of the needy population by pursuing the so-called Targeted PDS.

Progressive economists have been arguing for quite some time now that the Targeted PDS must be replaced by a system of universal access, and that a massive food-for-work programme would provide employment, create productive rural assets and reduce unsold stocks with the Food Corporation of India and thus reduce the subsidy cost of food. Moreover, such a programme, by putting purchasing power in the hands of a large segment of the rural population, will help the domestic market expand and thus revive industry as well. The CMP implicitly recognises the merit of this argument although it is still unwilling to accept a universal access PDS to ensure food security as recommended by the Abhijit Sen Committee.

THE CMP has partially recognised the irrationality of indiscriminate sale of public sector enterprises and disinvestment as an ideology. It has taken the view that, `generally, profit-making companies will not be privatised’. However, it has not also questioned the rationale of privatisation in general. That privatisation of public sector enterprises has become an article of faith with most proponents of the kind of economic reforms under way since 1991, including many in the UPA camp, is a reflection of the hold of neo-liberal ideology, which presumes that, other things being equal, the private sector is always to be preferred to the public sector. Such a mindset does not recognise the crucial role that the public sector has played in India and continues to play not only in meeting strategic needs but also in mobilising resources for development and strengthening self-reliance.

One has only to recall the state of India’s external dependence in respect of the oil industry prior to the establishment of oil refining capacity in the public sector in the early 1960s or the problems we faced in establishing a strong steel sector in the 1950s, or in more recent times, the contribution made by the public sector insurance industry to mobilising resources for development, to understand the critical importance of the public sector and the absence of any compelling generalised rationale for privatisation. Arguments for privatisation on the grounds of so-called `efficiency’ have been largely ideological.

A related issue in this context is the role of the private sector in infrastructure. Here, even while agreeing to review provisions of the Electricity Act, 2003, in response to the concern expressed by many State governments, the CMP reiterates a commitment "to an increased role for private generation of power, and more important, power distribution". Again, given the poor track record of the so-called fast-track power projects of the `independent power producers’ over the last decade and more, the rationale for this commitment is far from obvious.

In the wake of the results of the 2004 elections, and the mandate received by the Left parties, which have consistently opposed certain key aspects of the policies pursued in the name of "economic reforms" for over a decade and more vigorously by the NDA regime in the past six years, commentators have sought to downplay the verdict against the reform policies. The key role of the Left in supporting a secular government from outside has, it is claimed, caused considerable apprehension among foreign institutional investors, in particular about the possibility of reversal of reforms, and this, it is alleged, has led to sharp declines in the stock market indices.

All this is then presented as some kind of a catastrophe, the responsibility for which is to be laid at the door of the Left party spokespersons who had merely restated their well-known policy positions during the process of government formation. The basic question to be raised in fact is why should the Indian economy and its policies be held hostage to a group of international financial speculators and domestic bear cartels, and not the alleged irresponsible utterances of political party spokespersons.

It is in this context that one must take issue with the CMP’s commitment to encourage foreign portfolio investments. These are globally recognised to be "hot money" flows that do not contribute to productive investment, but merely enhance the vulnerability of the economies that receive such flows to the vagaries of international financial markets.

Foreign direct investment (FDI) is in a different category, and a case can certainly be made for attracting FDI flows. Even here, however, the matter must be put in perspective. Between 1992 and 2001, India received a total of $40 billion as capital inflows. Of this, $22 billion was portfolio investment, and $18 billion constituted FDI. Of this FDI amount, nearly half went into mergers and acquisitions, so that effective greenfield FDI was hardly $9 billion or less than $1 billion a year. This amounts to less than 1 per cent of our gross domestic product (GDP) and hardly 4-5 per cent of our gross domestic capital formation. FDI flows have increased in recent years, but not a great deal.

The point is not that we do not need FDI flows, but that its importance should not be exaggerated. Further, as the Chinese experience shows, FDI tends to go to an expanding economy and not the other way round. In other words, one cannot rely on FDI as the kick-starter or prime mover of growth. Government policies that encourage expansion of markets through enhancing the purchasing power of the population and through accessing export markets are critical. This last point brings us to the issue of basic land reforms.

The experience of many countries - and these include Japan, South Korea, Taiwan and China - demonstrates that land reform is the key to sustained economic development. Redistributive land reforms expand the number of stakeholders in the rural economy, unleashing the creative energies that the CMP talks about, and enables the growth of a home market, which can then become an engine of growth.

Besides, in our context, such reforms would have the salutary effect of breaking the hold of structures of caste oppression and expanding the democratic space. The CMP does make a reference to the implementation of land reforms in passing but does not give the issue the importance it deserves.

These observations notwithstanding, the CMP does reflect, on the whole, the mandate of elections 2004 for a secular and more inclusive society, economy and polity. It is a welcome first step forward in the process of building a confident, democratic and socially and economically modern and just society.

See online : Frontline

P.S.

Pic 1: AJIT KUMAR/AP; Leaders of the United Progressive Alliance and the Left parties releasing the CMP in New Delhi on May 27.

Pic 2: V.V. KRISHNAN ; A food-for-work programme in drought-hit Rajasthan. Such programmes, by putting purchasing power in the hands of a large segment of the rural population, will help the domestic market expand and thus revive industry as well.

Pic 3: V.V. KRISHNAN; Leaders of the Left parties at a meeting to dicuss the CMP in New Delhi on May 23.

in Frontline, volume 21, Issue 12, Jun. 05 - 18, 2004.

SPIP | template | | Site Map | Follow-up of the site's activity RSS 2.0