Volume 5, No. 1, January 2004

Curtail subsidies and social programmes of the govt., eliminate the ‘‘high employment goal’’, ensure all out expansion of the free play of market forces, competition and private initiative – these are the catchwords of the imperialist economists – the ‘saviours’ of the present crisis-ridden world capitalist economy. They put forward their theories to serve the interest of the imperialists. These economists also consider tax reduction and complete deregulation as incentives for work, saving, enterprise and efficiency to serve the vital interests of the imperialist forces – MNCs / TNCs. What is the vital interest of the imperialist? It is the continuous growth of capital accumulation which depends on expansion of capital. And expansion of capital needs domination over markets to ensure high profits. For the purpose, according to these economists, the rights of trade unions should be undermined; working class struggle for better conditions should be put down and a redistribution of incomes in favour of businessmen should be promoted. Moreover they assert that the private enterprise has the ability to overcome the crisis of the economy and revive the position of full employment. But the history of monopoly capitalism does not conform to their views, it rather opposes these views. The very implementation of these policies only further deteriorate the condition. The most glaring example are – Chile, Egypt and Israel. The plight of the people of these countries became deplorable while MNCs / TNCs reaped the fruits of people’s labour.

Since the late 80s, governments of all the imperialist countries adopted these polices as crisis management ones and began to get these implemented by the governments of underdeveloped countries. IMF, World Bank and World Trade organizations have also been peddling these crisis management measures. These imperialist controlled international organizations (exerting their authority) have been placing these measures before the ruling classes and their governments of backward countries. The ruling classes of most of these countries are dependent on the world imperialist economy for their existence and growth. Consequently, these ruling classes have been accommodating more and more these measures to save the world imperialist system for their own interest; they do not hesitate to disregard the interests of the country and the people. The name of this ugly imperialist plot is Globalization. The ruling classes and their political parties in India have also been accommodating the Globalization programme and have been providing more and more scope for ruthless imperialist exploitation. While raising so many populist slogans all the ruling class parties in power not only have followed the same economic policy, but also have tried to prove that they are more efficient than the previous one in implementing it. Let us trace the role of the ruling class parties in implementing these globalization measures:

The congress (I) was the pioneer in introducing the globalization policies. Following these policies the P.V. Narasimha Rao govt. of Congress (I) helped further intensify imperialist exploitation.

Mr. Manmohan Singh, the finance minister of the Rao Govt. issued the statement on Industrial Policy which paved the path for the new TNC offensive. According to this policy statement many new decisions were adopted. All these resulted in – (i) The entry of foreign investors were accepted in all industries. (ii) The ceiling of foreign capital was raised from 40% to 51% and upto 100% in certain industries (iii) defense, atomic energy, coal and lignite, mineral oils, railway transport and minerals specified in the schedule to the Atomic Energy Order – these six industries were reserved for the public sector, (iv) protection for small-scale sector was reduced –garments were already removed from the list, (v) industrial licensing was abolished except for a short list of industries, (vi) the restrictions imposed by the Monopolies and Restrictive Trade Practices Act (MRTP) on large firms’ expansion, was abolished, (vii) policy on utilization of foreign brand names was liberalized, (viii) TNCs were allowed to decide whether they would use imported or local materials. The implementation of all these policies only helped further expansion of imperialist capital and its domination over the economy of the country. Mr. Manmohan Singh, while introducing these policies, firmly asserted that through implementation of these policies, the economy would develop rendering prosperity to the people!

During the period of the Rao government, the Janata Dal was the major opposition party and expressed their strong opposition to the economic policy of the Congress(I) govt. They called Manmohan Singh’s ‘economic reform’ as ‘‘economic enslavement’’. But after assuming power as a leading constituent of the U.F., they did follow the same policy of ‘‘economic enslavment’’. In their Common Minimum Programme drafted by Sitaram Yechuri, the flamboyant leader of the C.P.I (M), the constituent parties of the U.F. put a target to attract $10 billion foreign capital per year. That was more than twice the record amount received in the previous year. To fulfil this target the U.F. govt. sped up the implementation of reforms for vindicating their genuineness!

In September, 1997 Mr. Murasali Maran, the ex-industries minister of the U.F. govt., properly represented the very attitude of the U.F. during a one-day summit in Washington. He said ‘‘we have had over 11,000 collaborations worth more than 38 billion dollars since 1981 and achieved a historic growth of 7% in G.D.P. ... you can come with a minority stake. In case you want to go it alone, we have allowed 100% equity in several sectors – infrastructure, power, roads, companies using proprietary technology, consulting firms or if the company is exporting 50% or more of its products. In special cases (like coke and Pepsi !!) we even permit 100% equity on a temporary basis, on condition that you will diversify 26% of equity in the next five years." A speech of genuine enslavement indeed!

The U.F. govt. geared up the pace of economic reform to win the favour of imperialist forces and surpassed the Rao govt. During the first three months of its tenure the FIPB (Foreign Investment Promotion Board) approved Rs.14,882 crores of foreign investment proposals whereas in the first three years the Congress (I) govt. had approved Rs.13,281 crores.

In August 1996, coal based power projects, hydro power projects and projects based on non-conventional energy sources were granted automatic approval for 100% foreign equity (shares) holding. In October 1996, private investment in the port sector was granted and automatic clearance for foreign equity up to 74% was permitted.

The Disinvestment Commission approved a list of 40 public sector units which included the most profitable Indian Telephone Industries and MTNL (Mahanagar Telephone Nigam Ltd.) and prestigious units like SAIL (Steel Authority of India), Air India, ITDC (Hotels and Tourism), NTPC (power) and GAIL (Gas Authority of India Ltd.). Immediately after this announcement, the commission invited leading foreign financial institutions like Jardine Flaming, Peregrine, James Capal etc. for discussions. Though these PSUs were profit making ones, the govt. argument for privatization was that those were running in huge losses! This was nothing but an attempt to cover their heinous plot against the country and the people to serve their imperialist master!

The U.F. govt. was at the service of imperialists, so the privatization spree continued. Privatization of mining was agreed rendering an influx of TNCs into this sector. Foreign capital into private airlines up to 40% was allowed. Prasar Bharati Bill was amended for 49% foreign equity ventures in broadcasting in the country. Private investment into power transmission was allowed. In January 1997, the FIPB guidelines were amended and the RBI was authorised to approve directly up to 74% foreign equity in nine categories including electricity generation and transmission, construction, mining services and the basic metals and alloys industries. It further included l6 more categories e.g. consumer goods, services, metallurgical industries etc. to the list of 35 industries which were accepted for automatic approval for foreign equity up to 51% and 50% foreign equity in mining of iron ore and other metallic ores like manganese, chromites, bauxite and copper. Moreover, the amended guidelines allowed investment proposals for majority holding even up to 100% foreign equity on a ‘‘case by case basis’’.

The small scale sector also had to face the onslaught of imperialist capital. The high powered ‘‘Expert Committee’’ on small enterprises placed its suggestion in January 1997. The committee suggested complete abolition of the policy of reservations for exclusive manufacture of certain products in this sector; removing the ceiling of 24% on equity participation by big business/industrial houses and Foreign Direct Investment. The ’97 budget proposal of the U.F. govt. accommodated these suggestions.

The U.F. govt. also made necessary changes in the financial sector and in trade to provide enough opportunities to foreign capital. The law was modified . On the plea of good ‘corporate governance’ and ‘The New Takeover Code’ was passed. In fact this is a charter for TNCs to takeover indigenous companies.

In its ’97 budget the U.F. govt. initiated the process of approving foreign participation in the highly lucrative insurance sector. As a first step it accepted foreign participation in Health Insurance.

Following in the foot steps of congress(I) govt., the U.F. govt. also reduced duty on imports from a maximum rate of 400% to 65%. It also allowed the import of a large number of consumer goods e.g. TVs, perfumes, lipsticks, nail polish etc. etc. In the ’97 budget the customs duty on imports of raw materials to the refinery sector was reduced to zero. These changes in EXIM (Export-Import) policy went against the interest of the country and the people. The influx of cheap foreign goods in the home market threatened the very existence of indigenous industry resulting in further increase in unemployment.

In mid ’97 the Tarapore Committee Report was released. This report put the year 2000 as the date for making the rupee fully convertible on capital account. As a consequence of full convertibility the govt. would have no control over foreign capital which could gradually exert its influence / control over all spheres of activity and even subvert the nominal ‘‘freedom’’ that exists to-day. An official R.B.I also expressed its concern over the disastrous effect of this step –‘‘It needs to be recognised, however, that an open capital account would not only limit the (monetary) authority’s independence in the conduct of exchange rate policy, but would also expose the economy to international shocks’’.

All these policies adopted by the U.F. govt. only exposed the true character of the constituent parties of the U.F. including the sham Marxists, CPI(M), CPI. They served the ruling classes and their imperialist masters. This govt followed the economic policy of the Congress (I) govt. and that too at a greater pace! The U.F. govt. surrendered more and more to the dictates of imperialist forces, and helped allow the penetration of imperialist capital more and more into all sectors of the country’s economy resulting in further enslavement and plunder!

The BJP came to power and in no time took up the task to complete the implementation of the globalization programme. Before assumption of governmental power it campaigned against Enron and projected itself as staunch swadeshi. Many a people failed to understand the BJP variety of the swadeshi concept. This variety of swadeshi does not stand in the way of prostrating more and more before the imperialist forces! During its 13-day rule in 1998 this swadeshi govt. led by Mr. Vajpayee took one only major decision. And that was to clear the counter guarantee proposal for the Dabhol Project. It was the BJP / Shiv Sena govt. in Maharashtra that provided greater concessions to Enron. Its ex-general secretary Pramod Mahajan ignoring massive local opposition took an active role to promote the Nippon Denro complex in Vidarbha.

The BJP govt. has been doing its best to follow the dictates of the IMF-World Bank-WTO and enjoying more and more confidence of imperialist govts, especially of U.S. govt. This govt. opened all the sectors to foreign investment accepting the terms of the imperialists – MNCs / TNCs. Consequently, foreign capital has expanded with better provisions for exploitation in Housing, Mining and Minerals, and power sector. Moreover the BJP govt. in its budget promised to double foreign investment by increasing concessions to the imperialists; it gave big grants to attract NRI investment; it decided to open out the entire insurance sector to foreign investment; it decided on the out right sale of the PS U by allowing as much as 76% of the share holding to be sold to private capital and TNCs; it reduced customs duties on crude oil by 5% a bonanza of some Rs. 1,500 crores per year, to the TNC oil companies.

The March ’99 budget of the BJP govt. was a glaring exposition of its servility to imperialist interests. In this respect it surpassed the records of all the previous govts. The pro-imperialists changes in policy engulfed all spheres of the economy e,g Trade, investment, financial services, telecom, patents, insurance, export-import, research and development, television viewing, housing, speculation and facilitating a host of TNC takeovers of even PS Us. In fact, these changes in policy provided only far more scope for expansion of imperialist capital but also to dominate over the economy of the country. Moreover, in that budget 74% equity by FDI was allowed in chemicals, pharmaceuticals and the fertilizer sector etc. and expressed its interest in U.S. agri-business.

The BJP govt. then passed the new patent Bill in which it did not even introduce certain safeguards allowed by the TRIPS. This change will render, according to a U.S. Trade Annual Report, a yearly gain to U.S. pharmaceutical industries of Rs. 2000 crores. The BJP govt. opened up the insurance sector to foreign capital, which the previous two govts. failed to do so. This step allows imperialists to hijack people’s savings for the benefit of foreign industry (i.e. U.S. industry) to the extent of Rs. 100 crores in premium revenue per year. Thus, following W.T.O dictates it liberalized trade in the financial services.

The introduction of revised EXIM policy ’97-2002 further widened the opening up of imports and went even beyond the demands of the WTO. It promised to convert all export processing zones (EPZs) into Free Trade Zones. This is defacto foreign territory within the country, to exploit cheap labour and utilise the infrastructure set up at the cost of tax payer’s money with little or no return to the country. This policy also widened the number of concessions for exports – grants, subsidies, incentives, cut in duties; credit facilities, free trade zones etc. will come to more than Rs. 5,000 crores.

The acts of abject surrender to imperialist forces continued. It began to remove restrictions on Derivative trading (i.e. speculation in future, ‘options’, ‘swaps’ etc.) on the Indian stock exchanges.

The sell out continued. In the March 2000 budget the govt. allowed Foreign Institutional Investments to increase their stake in the equity of Indian companies from a limit of 30% to 40% entailing more domination and control over the Indian stock exchange and companies. To facilitate more domination of TNC / MNC on Indian companies, three changes were made – to reduce govt. holding in PS Us to 26 % and in Banks to 33%, allocated Rs.1000 crores to sell out state electricity Boards, a restructuring of SAIL etc.

True to the interest of imperialist forces, the BJP led NDA govt. subserviently followed globalization measures – liberalization, privatization, structural adjustment etc. It also implemented other crisis management measures which resulted in curbing the rights of trade unions; massive retrenchments and wage-cuts of workers and employees; reduction in subsidies and welfare measures; reduction in small-savings interest rates and increasing curtailment of govt fund for the rural sector. As a consequence of these policies joblessness, starvation, destitution pervaded the entire country. Whenever people organize struggles to resist this economic onslaught, they have been suppressed brutally.

In the March 2001 budget Foreign Institutional Investments (FII) were favoured with more concessions – increasing the portfolio investment limit from 40 to 49% and providing big tax concession for investment in the capital markets (stock exchanges).

A number of sops were granted to foreign agribusiness. Big grain companies were allowed to buy directly from the farmers without paying any purchase / sales tax. And tax holidays were granted to companies investing in handling, storage and transportation of foodgrains. The car Industry dominated by big powerful MNCs was granted a reduction in excise duty from 24% to 16% along with an increase in customs duty on car imports.

It also allowed foreign goods to flood the indigenous market by a reduction in import duties from 35% to 20% and the 10% surcharge was removed. Moreover, imports of the following items were encouraged by reducing customs duties by 10-15% providing a bonanza of Rs. 2,128 crores to foreign producers – textile machinery silk / cotton ware, DMT, PTA, Caprolactum used in the manufacture of synthetic fibers, soda ash, rough diamonds, cut gems, LNG, Cine industry equipment, etc.

By reducing excise duty on aerated soft drinks and soft drink concentrates to vending machines from 24% to 16% it encouraged Pepsi and Coca Cola. It also granted a 10 year tax Holidays to industries like the core sector of infrastructure namely, roads, highways rail systems, water-treatment and supply, irrigation, sanitation and solid waste management systems; and for airports, ports, inland ports and water ways, industrial parks and the generation and distribution of power; and for the development of special economic zones (SEZs).

For the info-Tech sector it reduced customs duty from 25% to 15% and 32 more items were included into the list of machines and equipments imported at 5% basic customs duty. The 5 years tax holiday for telecommunications sector was further extended to March 2003.

March 2002 budget only extended all these programmes with great rapidity rendering the entire economy vulnerable to ruthless imperialist exploitation and domination.

It is nothing strange to find that all these major policies were openly supported by the Congress (I) and the major partners of the U.F. govt., including the C.P.I(M), CPI though they at times made a show of raising slogans opposing those policies. In West Bengal the ‘left’ Front govt. led by CPI(M) has been enthusiastically implementing all those policies.

All these parties are representing the interests of the ruling classes and adopting policies according to their directions. These parties do not hesitate even to prostate before the imperialists, to sell out the interests of the country and the people, and to suppress brutally the people’s struggle against this imperialist onslaught!

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