Retrograde Policies Can Only Benefit BJP

 Harkishan Singh Surjeet

THE recent controversy regarding foreign direct investment (FDI) in insurance, telecom and other sectors has brought the nation to a crucial pass. Now the people at large have begun to wonder whether the United Progressive Alliance (UPA) government is to go back on the word it had given them through its Common Minimum Programme (CMP).

One will note that the budget proposed to raise the FDI cap from 49 to 74 per cent in telecom sector, from 40 to 49 per cent in civil aviation and from 26 to 49 per cent in insurance. We of the Left have serious apprehensions regarding these proposals and will see to it that these proposals are rolled back. It is true that the hike in FDI cap in telecom and civil aviation sectors does not need the parliament’s sanction, but it will be unfortunate if the government uses this leverage to do what it wants and ignore the viewpoint of its allies.

CASE OF AIRPORT PRIVATISATION

AN unfortunate example of the kind was the way the government tried to privatise the Mumbai and Delhi airports. Let it be reiterated here that when the UPA side drafted its CMP, it was specifically mentioned that the profit making public sector units (PSUs) won’t be privatised. The Left naturally extended support to this idea. Moreover, it was also agreed that the government would take stock of which of the sick PSUs can be turned around by making some investment. This was logical. If, suppose, a sick PSU can start giving Rs 3,000 crore every year as profit after an investment of Rs 800 crore, there is for the government obviously no ground of not making this much investment. The idea was that privatisation route would be considered only in case of terminally sick PSUs.

Coming back to the issue of Mumbai and Delhi airports, it was precisely the above understanding which the civil aviation minister tried to flout. It is a known fact that both these airports are running in profit and therefore the government should not even have thought of privatising them. But this was precisely what was ignored and the minister, Prafulla Patel, announced his designs in this connection.

Moreover, it is not only that the move is patently against the CMP’s letter and spirit. The argument that privatisation is a must for these airports’ modernisation is equally vacuous. The fact is that the Airport Authority of India has a large surplus in its kitty and that is more than enough for their modernisation. In such a situation, even if we grant that the present government is motivated by good intentions, the undue insistence on privatising these airports or on allowing foreign companies to take them over can only cause doubts in public mind.

To date, the minister has not tried to remove the apprehensions of airport employees who are on the warpath. He is yet to give a coherent reply to their arguments and demands. In fact, the idea of airport privatisation has only been postponed for the time being and not shelved. Thus, if the minister tries to implement his move, the Left too will have to think how the game can be foiled.

FDI HIKE IN TELECOM

THE issue of foreign investment has also yet another sinister aspect. When Pepsi was allowed to enter the potato chips business in the second half of the 1980s, it was buying potatoes from Punjab peasants at dirt cheap prices, at 25 paise a kg, but selling its chips at Rs 180 a kg (retail price). The company was thus making super profits, which can be better termed as super loot, and the trend still continues with some quantitative changes in costs and prices. But the Pepsi’s entry was allowed despite the fact that India had no dearth of technology for potato chips production, and that too at much lower prices. In fact, the Pepsi’s entry in the field only killed hundreds of indigenous units, many of whom were small scale.

The decision to allow the entry of FDI or to hike its limit in vital areas is nothing but an extension of the same sinister logic that permitted the Pepsi into potato chips business. In telecom, for example, public sector companies like the BSNL and MTNL have state of the art technology with them and the BSNL has a very wide network all over the country. If the finance minister had argued that working of these companies needs to be streamlined and de-bureaucratised, it would have been perfectly understandable and we would have extended every possible help in achieving this goal. But no, the minister’s idea is something different. What he proposes to do can only enable foreign companies to take over Indian businesses, to the detriment of our national interest. The way the Tatas indulged in bungling after taking control of the VSNL does give an inkling of what foreign companies may do tomorrow.

Nor is the minister concerned that 74 per cent FDI in telecom will place foreign companies in a strategic position, where they will have access to vital defence related information, and this thing may pose a serious threat to our security.

As for the arguments that FDI hike will improve the telecom services or expand the telecom network, there is every reason to doubt their veracity. Nine years have passed since the 1995 telecom policy was adopted and private companies are yet to honour their commitment regarding rural telephony. Whatever they have done in this regard is only cosmetic, much below their promise, and nowhere near what the BSNL has done.

INSURANCE SECTOR

THE same holds good for the insurance sector that holds a vital place in our economic development. One recalls that some four and a half years ago the BJP led government got the Insurance Regulatory and Development Bill passed --- with the Congress help. One of the crucial provisions of that bill was that Indians would be able to enter the field only in collaboration with foreign players. A clear proof of the BJP’s penchant for foreign though it never tired of chanting swadeshi to dupe the masses.

One may recall that when the foreign and Indian private insurance business was nationalised in 1956, one of the main reasons was that these companies had become notorious for cheating the insurance seeking public and divesting them of their hard earned savings. Though the Life Insurance Corporation of India (LIC) began its business with a government investment of only Rs 5 crore, it has provided billions of rupees for the country’s development in the form of dividend to the government, taxes and loans. The other public sector company, the General Insurance Corporation of India (GIC) too has a similarly splendid record. In particular, what these companies have done for agriculture and rural development or for the development of small industries simply remains unsurpassed. Being concerned with their profit, which is their mai-baap, private companies are not willing to enter into such non-lucrative but vital areas.

In actuality, what has been the record of the numerous foreign-Indian pairs that have entered the field after the IRDI act? They have so far not been able to make any significant dent in insurance market, of which the public sector corporations still control over 92 per cent share. This plainly means that the insurance seeking public is not very sure of the intentions of these private players and still reposes faith in the LIC and GIC. It is true that private players are offering very attractive terms to the investors, but in most cases these terms are as deceptive as they are attractive. For example, one firm offers to insure your life for ten years for just a paltry one-time payment of Rs 1,940. But the (untold) catch is that if you do not suffer a fatal accident for ten years, you won’t get back even your premium amount. Ask your insurance agent about it and he will tell you the reality. The situation is that even insurance agents, who had high hopes of a rise in their incomes after the entry of private players, find their hopes belied.  

MINISTER’S CONCERN

THESE facts are as plain as they could be. But yet the finance minister is bent on not paying any heed to them, perhaps because his aim is to rush benefits to private players --- indigenous and foreign --- even at the cost of people’s interests.

Illustrative of it is the tamasha that was played quite recently. On July 8, the day P Chidambaram presented his budget in parliament, virtually all morning newspapers in the capital carried the story that interest rates on EPF and small savings could go up. This came as a joy to workers as well as other small savers. But by the time the minister finished his budget speech in the afternoon, small savers felt cheated and bombshelled, for no such announcement was made. How most of the English, Hindi, Urdu and Punjabi papers in the capital and outside came to publish the said news, still remains a mystery. Was it planted by the powers that be? Or by media barons? Or by some other vested interests? In any case, there is no denying that it was a cruel joke played upon crores of people.

The finance minister has to date not deemed it necessary to clarify how such a joke came to be played, or even that his ministry was not involved in it.

Be that as it may, the people were definitely expecting that the minister would hike the interest rates on EPF accounts and other small savings instruments. But, though he has not slashed these rates as the bourgeoisie were demanding, he has not raised them either. While the official (and highly deceptive) inflation rate has gone up to breach the 6 per cent mark, administered interest rates remain unchanged despite the claim that they would be inflation linked. If anything, the threat of a cut in these rates in future still hangs.  

The oft-repeated comparisons with low interest rates in US or Europe are simply meaningless. As The Times of India editorial on June 4 said, “These developed country parameters may not be the right indices to follow. Countries that are capital rich have lower interest rates, those that need capital have higher rates.” The reason is simple: these countries need to attract capital through higher returns. 

On the other hand, PC Sahib has hiked the service tax rate from 8 to 10 per cent and also increased the number of services to be taxed from 57 to 71. But the thing is that service tax is an indirect tax and their burden, in many cases, will fall upon the common people.

Ironically, PC Sahib has promised the share market speculators that the tax on stock market transactions, which he proposed in the budget, would be revised downward.  

ANOTHER WRONG MOVE

AND now the Congress led UPA is out to make yet another wrong move which, if unchecked, may one day encourage it to commit political hara-kiri. Only the other day, a paper had commented that the UPA’s FDI policy has left the NDA smiling, for FDI hike in telecom and insurance was the NDA’s idea. And now see what The Indian Express reported on July 13:

“Faced with opposition from its Left allies, the UPA government --- just like its predecessor --- may turn to the opposition to get the revised FDI limit through.

“The government hopes the BJP will come to its rescue as it was the Congress which supported the insurance bill in Rajya Sabha in January 2000 --- the NDA had got it through Lok Sabha on its own in December 1999.

“Sources said discussions between the two sides are on after the budget announced a hike in FDI cap from 26 to 49 per cent in the insurance sector last week.”

The report further said Chidambaran has asked the CII and FICCI to “address some of our friends in the Left parties and convince them (that the move is progressive).”

So now the bourgeoisie would sermonise the Left about what is progressive!

That the move aims to appease the indigenous bourgeoisie and the World Bank-IMF, which are acting like barking dogs of imperialism, is not in doubt. The way Planning Commission chief Montek Singh Ahluwalia praised the World Bank in an interview to The Indian Express (July 13) does not leave doubt about it. The interviewer Shekhar Gupta, the paper’s editor in chief, was correct at least when he described Ahluwalia as “You, an IMF man….”

But a far more important point is that if the Congress is really thinking of taking the BJP’s help in getting the insurance FDI move through, it would be only betraying the trust of the masses who gave their mandate to the UPA in order to rid the country of the BJP-NDA misrule.

The Left has decided to take up these matters with the government and formed a 6-member team for the purpose. The Left will try its best to ensure that no anti-people measure is taken, as that would only go to benefit the communal BJP and its cohorts. It is certain that the Left is not going to bring this government down, but it does not mean that the Left can be taken for granted. But, on its part, the Congress and UPA too would do well to recollect that it was the retrograde economic policies that caused the defeat of the Rao government, of the United Front government and, in conjunction with the communal drive, of the BJP led government.