People's Democracy

Joint Convention Demands Protection of Banking, Insurance Sectors & Pensions Funds

A national convention was held in New Delhi on December 12, 2008

jointly by the All India Insurance Employees� Association (AIIEA), Bank Employees� Federation of India (BEFI), Confederation of Central Government Employees and Workers (CCGEW) and All India State Government Employees� Federation (AISGEF) on �Global financial crisis and the need to protect banking, insurance sectors and pensions funds�. More than 800 activists of the trade unions and political parties participated in this convention.

The convention was organised in the backdrop of the global financial meltdown and the attempts by the UPA government to further liberalise the financial sector. The convention was unanimous that FDI hike in insurance is against our national interest and therefore has to be resisted in the strongest possible terms. The convention also opposed the Banking Regulations Amendment Bill and the PFRDA Bill. The convention supported the call of the AIIEA for a one day strike if the government introduces the legislation to hike the FDI in insurance. Similarly the convention supported the struggles of the banking employees against the proposed legislation seeking to raise the cap on the voting rights of the foreign investors. The pension reforms and the move to invest the PF funds in the equities were also opposed.

The convention was addressed by Brinda Karat and Tapan Sen, members of parliament who were very critical of the government policies and informed the audience that the Left parties would not allow the passage of the bills seeking so called reforms in the insurance, banking and pension sectors. M K Pandhe, president, CITU and H Mahadevan, secretary, AITUC extended the support of the entire working class to the struggles of the financial sector and government employees. Dr Prasenjit Bose, an eminent economist brought to light the dangers of neo liberalism and appreciated the struggles of the working class in stalling many of the moves of the UPA government to fully integrate the financial sector into the architecture of the global finance capital.

K Venu Gopal, general secretary, AIIEA placed the declaration before the convention for discussion urging the government not to further liberalise the financial sector. He said that domestic savings play an important role in the growth of the economy and these should not be handed over to the foreign capital and savings of the working class in the form of pensions and PF should not be privatised. There was a lively discussion participated by K K N Kutty, secretary general, CCGEW, R C Jagga, secretary, AISGEF, Pradip Biswas, general secretary, BEFI and other leaders of the trade union movement. There was total unanimity on the need for the joint struggle against the government policies. The declaration was unanimously approved by the convention.

A presidium comprising of Amanulla Khan, president, AIIEA, S K Vyas, president, CCGEW, R Muthusundaram, assistant general secretary, AISGEF and Sadashivan Pillai, president, BEFI conducted the proceedings.

Before the convention began, homage was paid to the innocent victims of the recent Mumbai terror attacks, to the two NSG commandos who laid down their lives fighting valiantly against the terrorists and the police officers who were martyred. The convention also paid its respectful homage to the memory of V P Singh, former prime minister.

DECLARATION

The national convention notes with serious concern the attempts to further liberalise the financial sector in India.

The UPA government has announced that it would bring two separate legislations in the coming session of the parliament to hike the FDI limits in insurance from 26 per cent to 49 per cent and other measures to further open up this sector. These amendments would allow foreign capital more control over the insurance premia mobilised in India.

The bill to amend banking regulation act 1949 to remove the present 10 per cent cap on voting rights to foreign investors in Indian private banks is before the parliament. There is also a move to amend State Bank of India act 1955 to allow reduction of government�s shareholding in State Bank of India to 51 per cent. Taking cue from the government�s moves, there has been a demand that even in the public sector banks the cap on voting rights of private investors should be removed.

The PFRDA bill which seeks to privatise the pension funds is also pending approval in the parliament. Union government has again decided to go ahead with the PFRDA bill which is meant for privatising the government employees� statutory pension system and making it contributory at the rate 10 per cent of pay every month and investing it in stock-market through a private or any other financial institution.

In the meantime, the government despite reservations and strong opposition expressed by the representatives of the trade unions has gone ahead with the decision to invest a specified portion of the provident funds (EPF) in the stock markets. These measures would not only jeopardise the savings of the people but would also place the precious domestic savings in the hands of the foreign capital.

The global financial crisis which came to focus in the form of sub-prime lending in the US has now had its impact on the entire economies of both the developed and developing countries across the world. A large number of banks have collapsed in the United States and Europe. The investment banks have simply vanished. Washington Mutual had to file for voluntary bankruptcy. Citibank had to be bailed out by the US government by agreeing to guarantee a major portion of its toxic assets. The insurance industry is under great stress and strain. The big insurance companies like AIG, New York Life, MetLife, Prudential, Aviva, Fortis and every other insurance company today is in tremendous difficulty and is seeking support from the governments to stay afloat. The outlook for the growth of the insurance sector in US, Europe and Japan is negative. It is beyond comprehension as to why the companies which are struggling in their own countries are being offered a big space in India.

It is now acknowledged that USA and European economies are already in recession. The workers and the ordinary people have enormously suffered due to this financial meltdown. The pension funds worth 2 trillion dollars in the US alone have disappeared. More than 16 trillion dollars have been lost in the stock markets. The US has lost nearly 1 million jobs and close to 2 million jobs are lost in the United Kingdom. Job losses have been taking place across the world and across the sectors. ILO estimated that by the end of 2009 the total job losses related to the crisis would be around 20 million across the globe.

India could not totally escape from the impact of this global meltdown. It is agreed that the impact on our financial sector is not that severe simply because of the fact that the Indian financial sector continues to be dominated by the public sector. The struggles of the working class and the stiff resistance by the Left and democratic political parties did not allow the UPA government to fully integrate Indian financial sector into the architecture of global finance capital. The inability of the government to implement the second generation reforms in the insurance, banking, pensions and adopting full capital account convertibility saved our nation from a great disaster.

Nevertheless, the impact is felt with the economy experiencing slow down and jobs being lost. The information technology and IT enabled services sector and informal sectors have to bear the brunt of the job-losses. The industries which depend upon exports like garments, gems and jewellery and handicrafts are in total disarray and lakhs of jobs have already been lost. It is estimated that more jobs are going to be lost and situation is grim.

In such a grim situation, one expected that the UPA government would have learnt its lessons. But that is not to be. The UPA government has undiminished faith in neo-liberalism and through measures to implement the second generation reforms in the financial sector, it is communicating to foreign capital its total commitment to the neo-liberal project. Bank deposits, insurance premiums and pension funds, all these constitute the people�s savings. The FDI hike in insurance, attempts to amend banking regulations to increase the FDI and to increase the voting rights of the private people, attempts to privatise pension funds, all these measures would enable the foreign capital with minimum investment to gain control over our huge domestic savings. At a time when there is a general agreement that government must make enormous investments and create jobs in order to reduce the impact of the crisis, it defies all logic to allow a greater access to the foreign capital over our domestic savings. There is also an attempt to allow a portion of the insurance funds to flow out of the country. This would not only jeopardise the savings of the people which are likely to be invested in the speculative ventures but would also deprive our national economy from valuable capital for investment in infrastructure and social sectors.

This convention, therefore, rejects the government moves to liberalise the financial sector � banking insurance and public service pensions. This convention is totally convinced that these measures would harm our long term national interests. It demands the government of India to give up the neo-liberal policies that have created massive inequalities in the country and make a course correction so that the benefit of development and growth could be enjoyed by the vast majority of our deprived people.

This convention extends all support to the struggles of the insurance employees including the strike actions against FDI hike and the moves aimed at facilitating the disinvestment of public sector insurance companies.

This convention unanimously extends its support to the struggles of the employees of the banking industry against the moves to increase the voting rights of the foreign capital in Indian private banks, against reduction of government�s shareholding in public sector banks and against the moves to increase the voting rights of the private capital in public sector banks.

This convention also unanimously extends its support to the government employees in their struggle against privatisation of pension funds.

This convention appeals to the people of India to firmly reject the liberalisation of the insurance and banking and pension sectors and join the struggles of the financial sector work force to defend our national interest.