Here we shall concentrate more on the periods of the UF and BJP as both make a big show of pretending to be against it, while the Congress(I) openly supports it. Both the CPI/CPM combine, constituent of the UF, with their half-hearted rhetoric, and the BJP with their ‘swadeshi’ slogan-mongering, have made much noise about their ‘patriotism’. But the fact shows the opposite.

The present trend of opening out to foreign capital was initiated by the PV Narasimha Rao/Manmohan Singh government of the Congress(I), and coincided with the big thrust in ‘globalisation’ internationally. It is the Congress(I) government from 1991 that actively promoted foreign capital in the country on a quantitatively new scale.

It was the statement on Industrial Policy issued by the Congress(I) in July 1991, which set the tune for the new TNC offensive. This policy, plus a series of new policy decisions, resulted in — (i) All industries being opened out for the entry of foreign investors (ii) the ceiling of foreign capital was raised from 40% to 51%, and upto 100% in certain industries (iii) only six industries were reserved for the public sector — defense, atomic energy, coal and lignite, mineral oils, railway transport and minerals specified in the schedule to the Atomic Energy Order. Thus, TNCs were now allowed into iron and steel, mining of iron ore, heavy electrical plants, telephone and telephone cables, generation and distribution of energy, etc. (iv) protection provided to the small-scale sector was reduced — garments were already removed from the list, (v) abolished industrial licensing 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) liberalised policy on utilisation of foreign brand names (viii) TNCs were now freed to decide whether they will use imported or local materials ... These policy decisions dramatically opened the doors wide to foreign capital.

While in the opposition the Janata Dal (or sections of it) raved and ranted about "economic enslavement", but when they came to power they have proceeded along exactly the same lines as the Congress(I).....only at a much faster pace. In fact the UF government’s policy of capitulation was framed in their very Common Minimum Programme, drafted by the ‘Marxist’ pundit, Sitaram Yechuri, which placed a target of attracting $10 billion in foreign capital per year – that is more than TWICE the amount achieved in the previous year, which, itself was a record amount. Quite obviously, with such ‘lofty goals’, the speed of implementation of reforms had to match it!! And it was this one GOAL that helped clear the path, and set the pace, for all the capitulationist policies that followed .... of course, with the CPI/CPM in tow.

The U.F. government followed in the Congress’s footsteps, which had already raised foreign equity ceiling (in Indian companies) from 40% to 51%, to 74% and finally to 100%. The ex-industries minister, Murasoli Maran, laid out the policies of capitulation, during a one-day summit in Washington (in September, 1997) on, investment opportunities in India, titled ‘Destination India’, when he slavishly said, "we have had over 11,000 collaborations worth more than 38 billion dollars since 1981 and achieved a historic growth of 7% in GDP..... 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."

In the very first three months after coming to power (July-September 1996) the UF government passed more foreign investment proposals than the previous Congress government did in the first three years. In those three months the FIPB (Foreign Investment Promotion Board) approved of Rs 14,882 crores of foreign investment proposals. [In the first three years the Congress(I) had approved Rs 13,281 crores worth]. In addition, it went one step further; to set up a Foreign Investment Promotion Council (FIPC) headed by three imperialist stooges – N.Vagul (ex chairman of ICICI), Ashok Ganguly (ex Chairman of Hindustan Lever Ltd) and Gurcharan Das (ex Managing Director of Proctor and Gamble) — whose job it was to seek out industries, in which to funnel foreign capital.

In August 1996 itself, the Ministry of Power decided that coal based power projects, hydro power projects and projects based on non-conventional energy sources be granted automatic approval for 100% foreign equity (shares) holding. In other words, approvals could be given directly by the RBI and need not be referred to the FIPB.

In October 1996 the government allowed private investment in the ports sector, permitting automatic clearance for foreign equity up to 74%. Now, existing ports were even allowed to be leased out for a tariff, up to a period of 50 years.

In the same month the Disinvestments Commission cleared a list of 40 public sector units for disinvestment. The list includes such prestigious units as SAIL (Steel Authority of India), Air India, ITDC (Hotels and Tourism), NTPC (power) and GAIL (Gas Authority of India). Also on the list were the most profitable PSUs — Indian Telephone Industries and MTNL (Mahanagar Telephone Nigam Ltd). And the reason given out for privatisation had been that the public sector companies are making huge losses — yet those being disinvested were the ones making the biggest profits!! Hardly had they made this announcement of disinvestment, when the Commission invited leading FOREIGN financial institutions, like Jardine Fleming, Peregrine, James Capel, etc., for discussions.

The government then agreed to the privatisation of mining, which immediately led to an influx of TNCs into mining and exploration. This was followed by the government allowing foreign capital into private airlines up to 40%. The Union Cabinet then passed amendments to the Prasar Bharati Bill making way for 49% foreign equity ventures in broadcasting in the country. Next, the Cabinet allowed private investment into power transmission by amending the existing law. The list could go on and on....but suffice it to say that there was hardly any sphere of the economy that was untouched by these ‘economic reforms’, whose single purpose was to allow foreign capital to completely envelope the country.

Further, in January 1997 the government announced major amendments in the FIPB guidelines, which opened the door even wider to foreign capital. According to these new guidelines automatic approval could be given by the RBI (without the necessity of FIPB approval) up to 74% foreign equity in nine categories, including electricity generation and transmission, construction, mining services and the basic metals and alloys industries. It also expanded the list of industries for automatic approval involving foreign equity up to 51% to include 16 more categories covering a mixture of consumer goods, services and metallurgical industries. The new list is in addition to the 35 industries, which are already eligible for automatic approval for foreign equity up to 51%. In the case of mining of iron ore and other metallic ores like manganese, chromites, bauxite and copper, as well as non-metallic ores, automatic approval of 50% foreign equity has been permitted. What is even worse, the new guidelines allow investment proposals for majority holding even up to 100% foreign equity on a ‘case by case basis’.

Even the small-scale sector was not spared. In January 1997 a high-powered ‘Expert Committee’ on small enterprises had suggested complete abolition of the policy of reservations for exclusive manufacture of certain products in the small-scale sector. It also suggested removing the ceiling of 24% on equity participation by large companies and FDI (Foreign Direct Investment). Some of these proposals were brought in, with the March ’97 budget.

Besides the FIPB and FIPC, in January 1997 the government set up the ‘Investment Promotion and Infrastructure Development Cell’ and investment promotion ‘windows’ for specific countries. ‘Focus Germany’ and ‘Focus Japan’, among others were operational for investment promotion activities in collaboration with Assocham, FICCI and CII (associations of the big industrialists).

As though these steps were not sufficient the UF government proceeded to make sweeping changes in the financial sector and in trade. It made an important change in the law, which substantially facilitated the TNC takeover of Indian industry. It goes by the name — ‘The New Takeover Code’. This is a defacto charter for TNCs to takeover Indian companies, even of the comprador variety. Camouflaged under the call for good ‘corporate governance’ (meaning good business management) this Takeover Code was passed. At the time of introduction of this Code, the media hacks filled the press with a variety of flowery articles on the incompetence of Indian managements ...thereby creating the right atmosphere, justifying the takeover of businesses by the TNCs and the passing of the Code. Needless to say, once this Code was in place, the media hype suddenly disappeared.

In the March 1997 budget the government began the process of opening out the insurance sector to foreign capital, by allowing foreign participation in Health Insurance, which was opened to the private sector. The imperialist countries had been continuously demanding the opening up of this highly lucrative sector.

In early 1997 the government gave FIIs the green signal for investing 100% of their funds in debt instruments (fixed deposits, etc.) of the Indian corporate sector. In mid-1997 they went even further, and permitted FIIs to invest in dated government securities.

In mid 1997 the UF government released the disastrous Tarapore Committee Report. This report put the year 2000 as the date for making the rupee fully convertible on capital account. Full convertibility would result in the government having absolutely no controls over foreign capital; it could worm its way into all spheres of activity (even more than what already exists) and strangulate all growth, all progress, all development and even the nominal "freedom" that exists today. The disastrous impact of such a step is evident even from an official RBI report, which said, "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." The result of full convertibility was to be seen in the 1997 financial crisis in East Asia, which was consciously battered by the imperialists.

And finally, the pathetic UF caretaker government meekly accepted the new WTO agreement for ‘liberalisation’ of the financial sector in December 1997, and immediately allowed the opening of twelve new branches of foreign banks each year, against the eight that was previously allowed. Such a far-reaching decision was taken by a mere caretaker government, with not even a squeak of protest from the opposition.

In the realm of customs duties, the UF government reduced duty on imports (which too had been initiated by the earlier Congress Government) from a maximum rate of 400% to 65%. In February 1997 the government allowed the import of a large number of consumer items by partial modification of the EXIM (Export-Import) policy — from TVs, to perfumes, to lipsticks and nail polish. 69 items were shifted from the SIL (Special Import License) to the OGL (Open General License) and 92 items shifted from the restricted category to the SIL. In the 1997 budget the customs duty on imports supplying raw materials to the refinery sector was reduced to ZERO. In other words, allow the country to be flooded by cheap foreign goods in order to kill indigenous industry!! — Such was the real essence of the government’s policies.

In a most brazen anti-national step, the UF government planned (in October 1997) to introduce a new system whereby the value of imported goods would be assessed at the time of shipment (and not by customs officials in India), and the Indian customs would be reduced to the mere clerical job of collecting the duty already decided by the assessment agency. This was a blatant attack on the Indian custom’s sovereign function of assessing duties. To add insult to injury, not an Indian company, but a Geneva-based company was being hired for pre-shipment evaluation of imported goods.

In the case of trade, after signing the humiliating World Trade Organisation (WTO) agreements, India has been under the obligation of amending the India Patent Act (1970). But, under the terms of the agreement, India has time till 2005 to meet the obligations of the TRIPS (Trade Related Aspects of Intellectual Property Rights) agreement. But, in the interregnum India has to accept applications for product patents on pharmaceuticals and agricultural products. (This for example, will lead to a five to ten fold increase in the cost of many medicines). The second obligation is that the government has to give exclusive marketing rights for five years to holders of product patents issued in another WTO member country — In other words American brand names can have monopoly control of products — and so monopoly prices!!

Next take the question of QRs. Here the imperialists (all together) have been even more brazen and crude. While demanding (and threatening) that India remove ALL its (quantitative) restrictions on imports, they themselves have been resorting to more and more protectionist measures against India’s exports. The double standards stand out blatantly. Each successive government has complied and now, the BJP-led government, has removed it well before the period stipulated by the WTO.

The BJP’s so-called swadeshi is yet another big hoax with India’s most servile agents of imperialism giving it total backing. Infact during the 1996 elections the BJP went on a high-pitched anti-Enron campaign and the Swadeshi Jagran Manch (an RSS outfit) quoted statistics to prove how the Dabhol Project would hurt the national interests. Yet, the ONLY major decision the Vajpayee government took during its 13-day rule in 1998 was to clear the counter-guarantee proposal for that power project. Then the BJP/Shiv Sena government in Maharashtra gave even greater concessions to Enron. Not only that, in spite of massive local opposition, Pramod Mahajan (an earlier general secretary of the BJP) has actively promoted the gigantic Nippon Denro complex in Vidarbha. In none of the states where they have ruled, have they put up any opposition to the TNCs, but have welcomed them with open arms.

And with the BJP coming to power and its fake bombast of the bomb, the government has capitulated to the imperialists with even more disgusting servility. In fact it has capitulated even in those spheres where the UF and Congress feared to tread. The day after the Nuclear tests, the then Housing minister, Ram Jethmalani announced the opening up of the housing sector to foreign investments. Three days later the Ministry of Steel and Mines approved the mining license for the US-based mining giant Phelps Dodge for prospecting for Copper and allied minerals in Bihar, and also to set up a 100% subsidiary. Then, with surprising speed on terms extremely favourable to the TNCs, counter-guarantees were granted for three fast-track power projects — the Vizag project of the Hindujas, the Neyvelli project of the US-based ST-CMS Electric Company and the Bhadravati projects of the Japan-collaborated Nippon Denro Ispat. Further, production-sharing contracts have been signed in the oil sector for 18 exploration blocks, 11 of which were with TNCs. The government also cleared as many as 34 proposals, 28 of them with TNCs, for prospecting and exploration of minerals, covering 49,000 sq. kms. in the mineral rich states of Bihar, Gujarat, Maharashtra and Rajasthan. And, last but not least, the ‘Swadeshi’ BJP passed a Videshi budget. It promised to double foreign investments 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 outright sale of the country’s PSUs, by allowing as much as 76% of the share-holding to be sold to private capital and TNCs; it reduced customs duty on crude oil by 5% giving a bonanza of some Rs 1,500 crores ($375 million) per year, to the TNC oil companies.... Earlier, in its new Exim policy it totally capitulated to WTO pressures by allowing imports on 340 additional items, which were earlier on the restricted list. Finally it servilely accepted all Suzuki’s demands in the Maruti dispute. And lastly, since the bomb went up the rupee has come down.... in just one month after the explosion the rupee got devalued by as much as 6%.

BJP’s servility to foreign interests, has reached such base levels that Yeshwant Sinha, while presenting the 1999 budget, said he was addressing the international audience. Never before, in these 51 years of so-called independence have such high-level secret dealings between the Indian and US governments taken place as reflected in the talks between Jaswant Singh and Strobe Talbott. In just one year, eight meetings took place, shrouded in secrecy, behind the backs of the entire country. But the fruits of these talks, taking place under the pretext of India’s nuclear explosion, are to be seen in the total capitulation of the BJP, not only regarding its readiness to sign the CTBT, but also more particularly in the economic sphere.

Amidst hectic diplomatic activity, the extent of pro-imperialist policy changes in the economy in just the one month of March ’99 has out-stripped, in its speed, any other period of the post-liberalisation era till then. And to facilitate this capitulation, the Swadeshi-spouting RSS scum diverted attention by raising the bogey of "conversions." To dupe its mass following away from these capitulationist policies, Christians were made the scapegoat as the supposed vehicles of Western influence in the country.

In just the month of March ’99, starting with the budget itself, there was no sphere of the economy that remained untouched by the imperialist foreign hand camouflaged with the BJP’s gloves. Trade, investment, financial services, telecom, patents, insurance, export-import, research and development, television viewing, housing, derivatives (speculation) markets, petroleum deregulation, and facilitating a host of TNC takeovers of even PSUs..... in all these spheres monstrous policy changes have been introduced that will allow further domination of the Indian economy by foreign capital. So, for example, in that budget, US agri-business was encouraged, FDI penetration was further liberalized, 74% equity by FDIs was allowed into the chemicals, pharmaceuticals and fertilizer sector, etc.

Soon after that budget the BJP took a number of further steps. The BJP-led government then passed the new patent Bill with undue haste. What is even more criminal and traitorous is that in the BJP’s final Patent Bill they did not even introduce certain safeguards allowed by the TRIPS. In this the BJP even went against its own Law Commission report, which called for certain changes in the new bill. A US Trade Annual Report has openly stated that a change in the Indian patent regime will mean a yearly gain to its pharmaceutical industries of $500 million (Rs 2,000 crores). There will be a similar gain for their agro-chemical industries. No doubt, they were thrilled by the BJP’s steps.

Next, it went ahead and opened up the insurance sector to foreign capital, a step that the earlier two governments tried, but failed to do. In this, the BJP-led combine has been far more brazen in their capitulation to imperialist dictates. Opening up this sector has been on the top of the agenda of the powerful foreign financial institutions. This highly lucrative sector gives access to the imperialists of the vast savings of the Indian people. Opening this sector to foreign capital virtually allows people’s savings to be hijacked by the imperialists. A US trade report says the opening out of insurance in India will benefit US industry to the extent of $25 million (Rs 100 crores) in premium revenue each year.

The opening up of insurance is part of a highly dangerous WTO treaty to liberalise global trade in financial services. This humiliating treaty was signed by the caretaker Gujral government in December 1997 and was to come into force from March 1999. The worldwide banking and financial services market is believed to be worth $22 trillion a year and the US has been resorting to much global arm-twisting to get the agreement signed. Yet, only 70 countries signed this. Here too, the then UF government (with the CPI/CPM in tail) in total servility to the US, not only signed this treaty but also a bilateral agreement of liberalisation of financial services that went even beyond that signed by countries like Thailand, Indonesia, Malaysia and Brazil.

What the UF initiated, the BJP completed; handing over India’s savings to the wolves of finance capital.

The revised EXIM (export-import) policy 1997-2002, introduced by the Commerce ministry on March 31, ’99 was the worst example of the extent to which the BJP government is prepared to go in selling out the country’s interests. The massive opening up of imports goes even beyond the demands of the WTO. And the doles to exporters, which were already high in the previous year, increased phenomenally. This de facto subsidy of hundreds of crores of rupees (the total estimates are hidden and not presented to the public) comes at the time when the government is ruthlessly cutting food, fertiliser and social welfare subsidies.

The government spends crores each day, fighting over a barren patch of land on the Siachin Glacier, but it has now handed over truly key industrial belts to the imperialists and their agents. The new EXIM policy says that all Export Processing Zones (EPZs) in the country will be converted into Free Trade Zones (FTZs) on July 1, ’99. Modeled along the lines of the export zones of the UAE, these zones would dispense with customs regulations, and, as the Financial Express states (April 1, ’99) "treatment of EPZs as outside the country’s territory, have a major bearing on the EXIM policy." Hegde further announced that the usual labour laws would not apply in the FTZs, and units in these zones would be exempt from payment of even corporation tax for a full ten years. In other words, this is de facto foreign territory, set up within India, to exploit our cheap labour and utilise the infrastructure set up at government cost (i.e. tax payer’s money) with little or no returns to the country.

When we turn to the export side, we find that, in the name of export promotion, huge subsidies and grants have been given. Already, most exports are free from income tax, a large number have no excise duty on them, and in fact many items get huge cash subsidies varying from 10% to 20% on the price-value. At a rough calculation this alone came to a gigantic subsidy of Rs 20,000 to 25,000 crores on exports of Rs 1,40,000 crores in 1998/99. The new EXIM policy now widened the number of concessions given for exports. If the total of all these grants, subsidies, incentives, cuts in duties, credit facilities, free trade zones, etc. to exporters are to be calculated it will come to not less than Rs 5,000 crores. Such is the additional gifts to exporters through the new EXIM policy, by a government desperately seeking to cut food subsidies and social welfare schemes.

But the extent of government renegacy does not end here. The story of traitorous betrayal goes on .... and all within a month of the Singh-Talbott’s eighth round of talks!!

To boost the profits of the Telecom sector, dominated by foreign players, the government introduced a series of changes. Through the TRAI (Telecom Regulatory Authority of India) it hiked up the telephone rates and rentals; a new telecom policy did away with state monopoly on long distance (STD) calls; and it announced a new telecom policy whereby it changes the license fee mechanisms to the advantage of the telecom operators.

TNC companies are set to reap a bonanza according to the Business Standard (29-3-99) with the finance ministry deciding to allow small-scale units located in rural areas and manufacturing branded products to have collaborations with companies that own and market the brand. Output up to Rs 50 lakhs will be totally free from excise duty while above Rs 50 lakh will attract excise duty at only 50%. The scheme came into effect on 1st June ’99. Through this policy decision the BJP sought to turn a section of small-scale businesses into compradors and also indirectly pass on the benefits available to this sector, to the TNCs.

In order to open out the country to the mercies of international speculators the government began removing restrictions on Derivative trading (i.e. speculation in ‘future’, ‘options’, ‘swaps’, etc.) on the Indian Stock Exchanges. Close on the heels of permitting ‘futures’ trading in eight edible oil seeds the government proposed to allow ‘options’ trading in goods.

Giving into pressure from the foreign TV channels, of the Rupert Murdoch/Star TV variety, the government announced two much awaited "reforms". It decided to further liberalise the up linking regime for Indian TV companies (that is also "Indian managed foreign TV companies"). From August 1, ’99 they were allowed to uplink from India directly instead of having to go through VSNL.

In the following two years of BJP-led rule, the sell-out continued apace.

In the March 2000 BJP budget, in the sphere of investments, in a series of policy changes, foreign capital was allowed greater penetration into the Indian economy:

FIIs (foreign institutional investments) was allowed to increase their stake in the equity of Indian companies from a limit of 30% to 40%. This would further tighten their grip on the Indian stock exchange and on companies in which they already have defacto control.

To push Indian companies further into the grip of the TNC tentacles, three changes were introduced. To facilitate the take over of Indian PSUs by foreign capital, the budget has outlined major privatisation plans: an intention to reduce govt. holding in PSUs to 26% and in banks to 33%, to facilitate sell-out of State Electricity Boards it allocated Rs 1000 crores, a restructuring of SAIL, etc.

After taking power in Oct. ’99, the BJP-led government was in desperate haste to sell off the wealth of our country and open the doors even wider to foreign capital. While the RSS, Shiv Sena and other fascist gangs of the saffron fringe, bark themselves hoarse against any opposition to feudal brahminical values (so-called cultural nationalism) they are silent on the outright sale of our country to foreign financial interests. The loud trumpeting on Pakistan, ISI, terrorism, conversions, "fire", "water", etc., not only creates the right Hindu fascist environment for the rulers, it also acts as a convenient smokescreen to hide the blatant anti-people, traitorous policies being silently pursued by the central government. Cultural nationalism promotes feudal values and culture; economic reforms, promotes imperialist penetration.

Going under the slogan of "second generation reforms", the second round of the BJP-led government in 1999, took a quantum leap forward in the process of liberalisation, privatisation and ‘globalisation’ of the Indian economy. Quite naturally it won immense praise from the so-called "international community", with the US even waiving some of its earlier imposed economic sanctions. The process of rapid sellout began from day one of its rule; and continued through the budget and post-budget period. The Clinton visit further catalysed the speed of capitulation to US imperialist interests.

It has been a three-pronged attack on the country’s interests. First, a host of bills, acts, legislations, policies, etc., dictated by the WTO/World Bank/TNCs, were rushed through by the cabinet, which gave an even freer hand to foreign capital to dominate and loot our country. Second, there were scandalous sales of Indian public property (PSUs, etc.) to TNCs and FIIs at throwaway prices; no doubt, for a hefty commission. And third, they encouraged and promoted foreign capital (FDI, FIIs, GDRs, etc.) to take over industry, finance and our natural resources, on a huge scale. In addition, in the name of a joint fight against ‘terrorism’, the US was invited not only to partake in Indian security-related matters, but the American intelligence agency, the FBI (Federal Bureau of Investigation) was, for the first time ever, allowed to open an office at Delhi …….. thereby further infringing on whatever nominal sovereignty remained in this country.

While shamelessly prostrating before the imperialist vultures, the BJP-led government launched huge hikes in diesel rates, electricity and water changes, etc.; massive retrenchments and wage-cuts of workers and employees; reduction in subsidies and welfare measures; reduction in small-savings interest rates by as much as 1%; and increasing neglect of the entire rural sector ……….. has been combined with brutal attacks on peoples’ struggles, when they seek to resist this economic onslaught.

Never before has such urgency been shown to conform to imperialist dictates. Barely two months after coming to power, in the 1999 winter session of parliament, the cabinet introduced as many as 45 new bills. Of these, eight were directed to meeting WTO (World Trade Organisation) stipulations, while the rest also sought to take the Indian economy deeper into the quagmire of ‘globalisation’.

These bills were introduced by the ruling BJP-led alliance, was openly supported by the Congress(I), and faced mock opposition from the ‘left’ and some others.

Let us take a look at some of the key legislations:

(a) WTO-related Bills

Most of the following bills, were introduced in the winter session of parliament in order to amend Indian laws to conform to the WTO’s TRIPS (Trade Related Aspects of Intellectual Property Rights) Agreement:

The Patent (Amendment) Bill, 1999, to change India’s existing patent laws in order to serve the interests of the TNC’s better. The Geographical Indication Bill, 1999, to deal with industrial property laws. The Trade Marks Bill, 1999, and the Designs Bill, 1999, to protect the growing penetration of foreign brand names. The Copyright (Amendment) Bill, 1999, to make the copyright act conform to the TRIPS agreement. The Plant Varieties and Farmer’s Rights Protection Bill, 1999, to encourage new varieties of plants and protecting the rights of researchers like Monsanto that are entering our country in a big way. The Semi-Conductor Integrated Circuits Layout Design Bill, 1999, to protect layout designs of semiconductor integrated circuits (IC’s) through copyrights and patents, to safeguard the interest of the powerful Information Technology TNC’s.

(b) IRDA Bill

International finance had been pressurising the Indian rulers since the previous five years, to allow foreign capital into the insurance sector. In anticipation, 15 major international insurance companies had already signed MoUs (memorandum of understanding) for prospective joint ventures with Indian collaborators. Some had even bought a stake in the equity of the Indian partner — like Standard Life’s 5% stake in HDFC, and ING’s 10% stake in Vyasya Bank. While earlier governments had moved cautiously, due to the sensitive nature of such outright betrayal, the present government rushed headlong into the opening up of insurance to foreign capital.

Amidst vehement opposition from the employees of the LIC and GIC, the Insurance Regulation Development Authority Bill was passed by both houses of parliament, at the very start of the winter season. On this the BJP-led alliance and the Congress(I) were united.

Though the IRDA stipulated a foreign equity cap of 26%, there were sufficient loopholes in the Act, which would enable the foreign investor to overshoot the 26% allowed. With this, foreign capital was all set to rob even people’s savings accumulated in the country.

(c) FEMA

FEMA (Foreign Exchange Management Act) was a boon to the hawala dealers, who siphon off about Rs 10,000 crores of black money abroad every year. FERA (Foreign Exchange Regulation Act) has now been replaced by FEMA together with the Prevention of Money Laundering Act (PMLA). Under FERA, hawala transfers were prosecutable offences, carrying a sentence of up to seven years. Under FEMA it is now a civil offence, liable to a penalty. FEMA also does not have any provision for recovery of dues. Though the regulatory powers of FERA have been shifted to the PMLA that too deals more with the forfeiture of property rather than criminal action. Besides, while both houses passed FEMA, the PMLA was referred to a Select Committee of the Rajya Sabha. Till now the PMLA, has conveniently been languishing amongst committees!!

So for the present, no regulatory powers exists whatsoever, sending not only the hawala dealers into ecstasy, but even the politicians, big businessmen and top bureaucrats who stash crores of their black money abroad. Not surprisingly, the Lok Sabha passed FEMA, with little discussion, at the end of the day, with barely 30 MPs present in the house!!

(d) Other Bills

Both houses of parliament passed a bill to liberalise mining, which removes restrictions on foreign companies participation in prospecting and mining. In the first week of April the Union Cabinet decided on the deregulation of the coal and lignite sectors. Thereby the country’s enormous mineral wealth was opened out for loot by the imperialist powers.

It also passed a bill to allow derivatives trading (i.e., in stocks, options, futures, etc.) in the Indian stock market. This huge market for financial speculation has now been opened out according to the dictates of the FIIs (Foreign Institutional Investors). In order to do so, both the Securities Contract (Regulation) Act, and the Securities Appellate Tribunal Bill have been amended. With FIIs already owning 15% of India’s total market capitalization at the Stock Exchange this liberalisation will further facilitate their vice-like grip over the stock market.

Then, a series of legislations were passed that totally handed over the Information Technology sector to the imperialists. The US had been aggressively demanding, at the WTO, that e-commerce be made tax-free. But even before the WTO took a decision, in mid-June the Indian Government decided not to tax e-commerce transactions. In fact, the central minister, Jaitly, boasted that in the past one year the government has drafted six new legislations, including the new telecom policy, the ISP Act and the TRAI Amendment Ordinance. The new telecom policy itself gifted away as much as Rs 2,300 crores, to the telecom companies, all of which are TNC-collaborated.

(e) Boon for Import-Export Sector

The WTO has demanded that all countries remove these quantitative restrictions by the year 2003. The BJP swadeshi-screamers have obliged nearly four years in advance. In a highly retrograde step, the government struck an agreement with the US, in the first week of Jan. 2000, to remove all Quantitative Restrictions (QRs) on imports by April 2001 — that is, two years before the date set by the WTO. The removal of the QRs has been a major point of contention between India and the other imperialist countries. India then went ahead and struck separate agreements with most countries for removal of QRs by 2003. as stipulated by the WTO. But the US demanded a faster pace, and refused to sign a similar agreement. FINALLY, THE BJP- LED GOVERNMENT TOTALLY CAPITULATED TO US PRESSURE BY ADVANCING THE DATE BY TWO YEARS. What was even worse, this new date became applicable to all countries, and would negate the other independent agreements signed.

True to this agreement, in the new EXIM (Export-Import) policy announced on March 31, the government abolished QRs on 714 items. These primarily included products reserved for the small-scale sector and agricultural commodities. This resulted in a flood of cheap imports, and has had a disastrous impact on both these sectors. In addition the government allowed second hand capital goods to be freely imported without any license; and further cut the import duty on capital goods from 10% to 5%. So, in other words, the local capital goods industry will also be hit. Besides this, in this EXIM policy, the government announced a large number of concessions to exporters and removal of a number of controls.

In a major concession to foreign capital, the government announced the setting up of Special Economic Zones (SEZs) in which FDI will be allowed to invest at a full 100%. Initially three were decided at Gujarat, Tamil Nadu and Orissa; while the existing four EPZs (Export Processing Zones) were to be converted into SEZs. Three more SEZs were planned for Navi Mumbai, Calcutta and AP. These SEZs, would be exempted from a plethora of rules and regulations governing exports and imports; they would be allowed a tax holiday and be exempted from sales tax and octroi, and be treated as "public utilities" in order to restrict Trade Union rights. This virtually amounts to setting up foreign enclaves within the country — all in the name of promoting exports. As announced in end May the SEZs would be deemed to be a foreign trade territory and goods produced here would have to be IMPORTED by India if they are to be purchased here. No duties, taxes, laws would apply to companies operating in these areas. Yet these companies could process goods within ‘Indian territory’ (outside the SEZs) without any regulations.

Even though opening out the currencies of various countries proved disastrous during the 1997 S.E.Asian crisis, and then again more recently in Turkey and Argentina, this budget went a long way on making the rupee convertible on capital account (which means we can exchange rupees for dollars over the counter at any bank) — throwing it open to the vagaries of the international markets. The latest budget took two major steps in this direction:

Next, a number of sops were granted to foreign agribusiness; notably big grain companies were now allowed to buy directly from farmers and exempt from all purchase/sales tax; and those investing in handling, storage and transportation of foodgrains were given tax holidays.

Not only did the budget facilitate the penetration of foreign capital it opened the doors wide open to allow foreign goods to flood the Indian market by a reduction in import duties. The Finance Minister went so far as to say that in three years the peak rate would be reduced from the present 35% to just 20%. In this budget the 10% surcharge was removed and so the peak rate dropped from 38.5% to 35%. Besides, the customs duties on the following items was reduced by 10-15% giving a bonanza of Rs 2,128 crores to the foreign producer — textile machinery; silk/cotton ware; DMT, PTA, Caprolactum used in the manufacture of synthetic fibres; soda ash; rough diamonds; cut gems; LNG; Cine industry equipment, etc.

Even Pepsi and Coca Cola were given sops, reducing excise duty on aerated soft drinks and soft drink concentrates to vending machines from 24% to 16%. Next: 10 year tax Holidays were granted to a vast spectrum of 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 waterways, industrial parks and the generation and distribution of power; and for the development of special economic zones (SEZs).

The Info-Tech sector too were given sops: Customs duty was slashed from 25% to 15%; 32 more items were added to the list of machines and equipment imported at 5% basic customs duty; The 5-year tax holiday for the telecommunications sector which ended in March 2000 was extended to March 2003; Government decided to fully computerise various wings and departments by March 2003, creating a huge market for computer hardware.
 

Even though opening out the currencies of various countries proved disastrous during the 1997 S.E.Asian crisis, and then again more recently in Turkey and Argentina, this budget went a long way on making the rupee convertible on capital account (which means we can exchange rupees for dollars over the counter at any bank) — throwing it open to the vagaries of the international markets. The latest budget took two major steps in this direction:

First, it announced the full convertibility of all deposit schemes of NRI’s (Non-Resident Indians) in India. In other words the huge NRI deposits, amounting to roughly $8 billion (Rs 40,000 crores), was made part of India’s external debt — where interest and repayment charges would now have to be paid in dollars. Not only that, the budget also permitted NRIs to freely repatriate current earnings in India, such as rent, dividend, interest, etc. in foreign exchange.

Second, FIIs (Foreign Institutional Investors — or hot money) was given free play to take over Indian private banks. The sectoral cap of 24% in FII’s portfolio investment in private banking was removed allowing even 100% foreign equity in Indian private banks. In addition, FIIs were also allowed easier access to Indian companies, and to indulge in derivatives trading on the Indian stock market.

These were nothing but two major steps towards making the rupee convertible on capital account. This would have serious implications for India’s currency security, whenever the international financial speculators decide to attack the currency, or withdraw their vast funds parked here.

Besides this major opening up to the imperialists, the budget introduced a host of new measures that further facilitated TNC operations in this country and help extend the markets for their products.

In the sphere of trade, both imports and exports were given massive concessions. The concessions for imports allowed for a flood of foreign goods, which would have a disastrous impact on indigenous production. The export concessions allowed the imperialists to rob our goods cheap due to the unfavourable terms of trade. With the continued devaluation of the rupee Indian goods get sold at throwaway prices in dollar-terms. The following measures were introduced in the budget and the new EXIM policy:

The new EXIM policy:

1) Removed all Qualitative Restrictions on exports, including those on agricultural commodities

2) Created 20 new agri-Export Zones for promoting agri-exports. 20 AEZs were identified in 15 states for promoting horticultural products. These would be set up by government investments, credit facilities provided and would be through collaborative efforts of the state govts., the center and entrepreneurs.

3) Transport assistance would be given for export of fruits, vegetables, floriculture, poultry, dairy products, and products of wheat and rice.

Other Gains for the TNCs and their comprador collaborators:

This process of opening out more and more sectors to foreign capital goes on unabated. For example, in June 2002 the print media was opened out to foreign capital. This was in spite of the fact that a large section of the media opposed it, and also a parliamentary committee formed on the issue voted against it. Not only the BJP, but the ‘swadeshi’ mouthing RSS, vigorously supported this move. Simultaneously it also allowed 100% FDI in tea industry, including tea plantations.

Now let us see the impact of these policies on the actual economy of the country.