Debating India


Conflict of interests

Saturday 21 May 2005, by GHOSH*Jayati

The record of the UPA government so far is an extremely mixed one, with some positive measures and several others which are fraught with danger and dubious implications.

IF ever there were evidence of internal contradictions and conflicting pulls and pressures in a government, the United Progressive Alliance (UPA) government is a classic example. The Congress has historically been an umbrella organisation, from the time of its origins in the national movement. It has incorporated many different tendencies, from those overtly representing corporate interests to those with more concern for farmers, workers and the socially backward and disadvantaged groups. And this remains true even today.

In its previous period in government in the 1990s, the Congress was leaning much more towards the interests of large capital, both national and international, and was much less inclined to protecting the interests of ordinary people. The whole period of "globalisation" and neo-liberal economic reform indicated the greater political voice of corporate and middle class groups within the Indian ruling class (which is notably distinct from the polity per se).

The elections a year ago which brought the Congress back to power at the national level reflected the realisation among sections of the party, and particularly its leader Sonia Gandhi, that it would have to recover its traditional base among the poor, and re-orient its policies towards the concerns of common people. But other sections of the party remain overwhelmingly pro-capital, and there are certainly some sections in power today, especially those with relatively weaker political bases of their own, whose actions reflect the interests of international finance with more effectiveness than they actually serve the ultimate interests of Indian citizens.

The UPA alliance, in turn, represents an even greater conglomeration of interests, containing regional and explicitly caste-based parties, which are typically united chiefly in their continued opposition to the communal agenda of the previous National Democratic Alliance (NDA) government. Some among these parties try to align themselves with more progressive economic policies; others do not know enough about it or simply do not care enough to bother to intervene or enter into debate on such matters. The Left parties, providing outside support, have been caught in a cleft stick, finding themselves ignored on many critical issues of great national importance (especially matters of economic policy) and often only able to exercise rearguard action in preventing the implementation of very negative policies. In the process, the bureaucracy - much of which has class interests increasingly allied with international finance and an international "elite" generally - has become much more powerful, especially in pushing through certain kinds of legislation and stalling progressive measures.

It is not surprising, therefore, that the record of the UPA government is an extremely mixed one, with some positive measures and several others which are fraught with danger and dubious implications. Consider the pattern of legislation alone. No one can accuse the UPA government of inactivity in terms of new legislation: if anything, it has been almost alarmingly hyperpactive, with large numbers of bills presented in Parliament, some of them passed, and many others in the pipeline.

Many of these are important and necessary, some of these are problematic, some reflect promises which are being only partially kept, and some are downright dangerous. Since the constituents of the NDA have effectively reneged on their role as Opposition by continuously boycotting Parliament on the flimsiest of pretexts, the role of Opposition has really been taken up by the Left, which still does not have the numbers to make enough of a difference in terms of passing legislation. Yet the story of each of these bills presents an interesting example of the contradictory nature of this government.

Take the Right to Information Bill, which was tabled only after sustained pressure from various organisations and from the National Advisory Council (NAC). The Bill that was tabled was massively diluted by effectively removing the State governments from the purview of the Act and reducing the clauses which related to access to security information.

Since State governments are effectively responsible for most of the activities that affect the daily lives of people, this made the actual right to information almost laughable in its irrelevance. Only after continued public pressure, and apparently even the personal intervention of the Chairperson of the UPA, were changes made to the Act that was finally passed, so as to bring State governments under its purview and provide greater access to some security information as demanded by human rights groups. Nevertheless, the passing of the Act does mark a clear victory for progressive forces inside and outside the government.

The new Patents (Amendment) Act is another complex issue. The Left has consistently opposed this Act for more than a decade. When it was tabled once again by the UPA, the Left parties proposed 21 amendments which sought to provide protection to domestic users of technology, allow greater possibilities for compulsory licensing, restrict the possibilities of monopolies through patents, and control the patents of life-forms. Surprisingly, almost all of these were accepted and two remaining contentious issues were referred to the Standing Committee. The Left parties ended up supporting the legislation, while the NDA (which had previously sought to bring in a much more oppressive patent law) abstained.

The current limbo of the National Rural Employment Guarantee Act, also tabled by the UPA government, is similarly instructive. The Common Minimum Programme of the government promised to enact legislation that would guarantee 100 days of employment to every poor and lower middle class household in both rural and urban India. The NAC proposed a Bill that was quite extensive and generally in tune with this promise, despite some problems with respect to financing. But the government tabled a Bill that made a mockery of the promise. It introduced so many restrictions and conditions that there was no effective guarantee provided at all.

Thus, the Bill that has been tabled does not provide for universal access or time-bound extension of the guarantee to the whole of rural India. It restricts the guarantee to households below the poverty line, ignoring the inherently self-targeting nature of the scheme. It allows the government to change and backtrack on the guarantee by specifying that only those "areas notified from time to time" will be those in which such a guarantee will be provided. There are many other problems with the law, but in essence the point is that it has been diluted by sections of the government including the bureaucracy to a form in which it is effectively meaningless.

The UPA government did not agree to send the draft Bill to a Select Committee of Parliament, which could have forced more desirable changes. Instead, it has been referred to the Standing Committee on Rural Development, where all work has come to a standstill because of the NDA boycott of Parliament (the Chairperson of the committee is Kalyan Singh of the Bharatiya Janata Party). It remains to be seen to what extent this important and necessary law, which is based on a major promise of the UPA government, actually fulfils even partially the original promise.

BUT the story does not end here, since the bills are now coming fast and furious from the government stable. So frequent and so many are the new laws which are planned and even tabled that it is difficult, if not impossible, for civil society and concerned citizens, not to mention parliamentarians themselves, to even find out what they contain and the full implications of the proposed new laws so as to make informed judgments about what to support and what to oppose.

These new laws are of all sorts, ranging from a proposed law on controlling communal violence to one on the land rights of tribal peoples, and in most of them the devil is in the detail. But the sheer number of these bills, the rushing through in Parliament, and the inactivity of the official Opposition, make it likely that many of them will get passed even in their dubious forms.

One proposed law for which this must definitely not happen is the Bill introduced in the Lok Sabha on the penultimate day of the last session to amend the Banking Regulation Act of 1949. For some time the Finance Minister has been seeking to reduce the 10 per cent cap on voting rights for foreign investors in private commercial banks, and instead make such rights commensurate with the extent of share held. This would allow foreign investors to hold controlling power over domestic banks, since they are allowed to invest up to 74 per cent of the equity (a move initiated by the previous government and implemented with zeal by the current one).

The Finance Minister has argued that this is necessary to "create an enabling environment for higher FDI inflows along with infusion of new technology and management practices resulting in enhanced competitiveness". Nothing could be further from the truth, as the Reserve Bank of India’s (RBI) own empirical studies indicate. In fact, the RBI has been definitely lukewarm about the proposal, and suggested guidelines which would still operate to disallow foreign investors from exercising controlling rights.

The Left has consistently opposed such a move, and this law has been introduced despite its protests. The Left’s concerns are valid and important, since there is extensive national and international evidence that such deregulation, especially foreign control, greatly enhances the scope of speculative activities and exposes the financial system to all sorts of risks. Banking crises in countries as distant as Argentina and Turkey have been strongly related to the speculative role played by foreign owners of domestic banks. Nevertheless, the UPA is pressing ahead with this, and the peculiar contortions of the Opposition give rise to the fear that even this very risky legislation could get passed despite Left protests.

The peculiar combination of aggressively active legislation and relative inaction in terms of economic policy changes that really matter is probably inevitable given the very composition of the UPA government. But the Indian political scene is complicated and constantly changing, so even this current assessment may not be valid for very long.

See online : Frontline


Volume 22 - Issue 11, May 21 - Jun. 03, 2005

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