Posts Tagged ‘sitaram yechury’

Modi@365

May 31, 2015

Regressive Phase

Sitaram Yechury


Sitaram_Yechury_sketch

More dangerous than unmet economic goals is the ideological chauvinism.

The King of France, Louis XV, achieved notoriety for saying, “After me, the deluge”. As the first year of this Bharatiya Janata Party-led National Democratic Alliance government ends, Prime Minister Narendra Modi seems to be amending this to read as: “Before me, the void: After me, the deluge”. He has gone as far to say, twice on foreign soil in May, that NRIs were “ashamed” of being called Indians before he got elected.

During the course of this one year, we are being told ad-nauseum that Mr. Modi is rebuilding India from the ruins left behind by six decades of successive governments. Alas, Atal Bihari Vajpayee and the six-year long NDA government have been confined to forgotten history. Undoubtedly, there has been a plethora of unfulfilled promises, a merciless loot of our resources and growing exploitation of our people during these decades. This, however, is not the point of this Modi government’s public relations exercise. Their point is to portray the Prime Minister with the arrival of a messiah a la the mythological Kalki Avatar. Never mind that the Governor of the Reserve Bank of India has recently said that Mr. Modi must not be thought of as “Ronald Reagan on a white horse”. The myth-manufacturing PR wheel continues to turn.

It is now clear that what has been attempted this year is an attack on whatever rights common Indians have managed to achieve through struggles for so far. The government is in retreat, with huge cuts in the budget, in vital areas of health, education, social welfare, Scheduled Castes/Scheduled Tribes sub-plans etc.

There is a new trident of challenges that is being constructed before both the country and the people: there is an aggressive pursuit of neoliberal economic reforms, an onslaught on the secular democratic foundations of the Indian republic by the sharpening of communal polarisation, and a the slow but certain movement towards authoritarian rule. The last is easily seen in the damaging of democratic institutions and the bypassing of methods sacrosanct in a parliamentary democracy.

Economic challenges

This NDA government is aggressively pursuing neoliberal economic reforms followed by the previous Prime Minister, Manmohan Singh. All key sectors of our economy have now being opened up for greater Foreign Direct Investment inflows. The government is backtracking on many issues that it had opposed earlier such as permitting FDI in retail trade. The most brazen U-turn has been the new Land Acquisition Ordinance that it has pushed through thrice after having supported the 2013 Bill. The urgency to hand over real estate to foreign and domestic corporates for profit maximisation is driving the government’s agenda at the expense of ruining vast sections of our peasantry. Precious mineral resources are being handed over for private profit along with ambitious targets of the privatisation of the public sector. Crony capitalism is having a field day.

The statistical base year for national income accounts has been changed in order to project the GDP growth rate in better light. Despite this, it is clear that manufacturing and industrial growth is just not taking off. Corporates have registered an unprecedented accumulation of inventories. This is leading to a fall in employment sharply. Coupled with the relentless rise in the prices of all essential commodities and successive big hikes in the prices of fuel, this is imposing severe hardships on the livelihood of our people.

Agrarian distress

The agrarian distress is deepening. For the first time since Independence, a fall in the total cultivated area has been reported. With the hike in the prices of inputs and the sharp decrease in subsidies, many farmers are abandoning agricultural activity as they are unable to survive. Forced to borrow, they suffer debts that they are unable to repay. This is resulting in continued incidents of distress suicides. The state of the workers is no better — the share of wages as a proportion of GDP now stands a little over 10 per cent compared to over 25 per cent in 1990-91.

On the other hand, the rich have become richer. As per the Forbes list 2014, the 100 richest people in India are all U.S.$ billionaires, i.e., 45 more than the figure of 55 in 2011. The combined wealth of these 100 billionaires comes to $346 billion. The share of the top 1 per cent in the total wealth of households has increased from 36.8 per cent in 2000 to a phenomenal 49 per cent in 2014. The promised ‘better days’ or ‘acche din’ are turning from illusions into a nightmare for the vast majority.

Communal polarisation

Simultaneously, communal polarisation is being kept on the boil and is being sharpened through governmental patronage. The BJP, as the political arm of the Rashtriya Swayamsevak Sangh, is advancing the project of transforming the modern secular democratic Indian republic into the RSS project of an intolerant ‘Hindu Rashtra’. The communal campaigns of ‘ghar wapsi’ and the stigmatisation of inter-religious marriages as ‘love jihad’ are accompanied with frenzied efforts to replace history by mythology and philosophy by theology. This is resulting in attempts to change the curriculum of schools and the nature of research bodies in the country. There are growing reports of communal tensions and even riots from various corners of the country. Attacks on Muslim minorities and targeting Christian churches in particular have grown exponentially. Mr. Modi has not assured even on the floor of Parliament that action would be taken against those who violate the law with impunity, by delivering inciting hate speeches.

Using the strength of its majority in the Lok Sabha, albeit with just 31 per cent of the vote polled, the BJP bulldozed nearly 50 legislations without parliamentary scrutiny. Parliamentary scrutiny is exercised by the Parliamentary Standing Committees examining all legislative proposals. These committees have as their members virtually the entire political spectrum represented in both Houses of Parliament at any point of time. This enables them to suggest fine-tuning of these legislations and if necessary, to reconsider or redraft some.

These are indeed ominous signals. This year has been marked by the NDA not being able to meet economic expectations, no doubt. But it has heralded a new and retrogressive phase in India, which is more dangerous. The government is stepping back from international commitments made in the spheres of environment, human rights and labour laws, the latest being the changes in the Juvenile Justice law. This government believes in reversing progressive economics by minimising government where it is most required — pulling millions out of poverty — and replacing it with policies for the already rich and powerful. This, along with a narrow and chauvinistic idea of India, threatens to push back even small social gains made. Social peace and harmony are undervalued goods, and any attempt to tinker with social amity as political design will have explosive consequences.

Moreover, Mr. Modi and the BJP claim as their triumph the fact that no corruption scam has emerged during the course of this year. Does anyone recollect any such scam during the first four years of the UPA government? Just as time exposed the UPA scams, so will time expose this government’s record in aggressively pursuing crony capitalism.

Louis XV’s infamous remark is widely believed to have anticipated the French Revolution. What Mr. Modi’s attempts to paint India as the land of the void before him leads to, surely time will tell.


Sitaram Yechury is the general secretary of the Communist Party of India (Marxist).
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‘Oil Firms Not in the Red’, says Yechury

September 14, 2012

Sitaram Yechury on Diesel Price Hike

Sitharam Yechury, MP, along with M.A. Baby, former Kerala Minister (left), during the Democratic Youth Federation of India's ninth all-India conference, public meeting, at Freedom Park, in Bangalore onTuesday. Photo: K. Murali Kumar

Sitharam Yechury, MP, along with M.A. Baby, former Kerala Minister (left), during the Democratic Youth Federation of India’s ninth all-India conference, public meeting, at Freedom Park, in Bangalore onTuesday.

Bangalore, Sep 11, 2012: The government will perpetrate a great “fraud” on the people by allowing oil companies to go ahead with a hike in fuel prices, Communist Party of India (Marxist) MP Sitaram Yechury said on Tuesday.

Pointing out that all the oil companies, as per their recent declarations, had posted profits, he said, “Together, they have a cash reserve of Rs. 1 lakh crore. They are hardly in the red as they claim.”

Speaking at the inauguration of the ninth all India conference of the Democratic Youth Federation of India (DYFI) here, Mr. Yechury challenged the government claim that a hike in fuel prices was the only way to control the rising fiscal deficit of 6.9 per cent (Rs. 5.21 lakh crore).

“The government has given large corporations tax exemptions of Rs. 5.28 lakh crore. The exchequer has lost Rs. 1.76 lakh crore in the 2G scam. Another Rs. 1.86 lakh crore has been lost in the coal allocation scam. All this money could have arrested fiscal deficit.”

The money lost through scams and subsidies to the rich would lead to acute gaps in delivery of healthcare, education and food security.

“If every child in the country was sent to school with uniforms, books and a midday meal, it would cost Rs. 1.76 lakh crore. If every Indian household is given 35 kilos of foodgrains a month (at the subsidised rate of Rs. 2 per kg), it would cost Rs. 1.2 lakh crore.”

Launching a no holds-barred attack on Manmohan Singh, Mr. Yechury said Coalgate had seriously undermined the legitimacy of the office of Prime Minister.

“The rate at which ministers are being caught in the scams, Mr. Singh might have to convene the next Cabinet meeting in the Tihar jail,” he said.

Courtesy: The Hindu

Tainted Prime Minister

September 8, 2012

COAL FIRE

VENKITESH RAMAKRISHNAN

The CAG reports on the allocation of coal blocks, ultra-mega power projects, and PPP in Delhi airport cause political tremors.

    THE three reports of the Comptroller and Auditor General (CAG) pertaining to the allocation of coal blocks, ultra-mega power projects and public-private partnership (PPP) in Delhi’s Indira Gandhi International Airport were perceived as potentially damaging for the Manmohan Singh-led United Progressive Alliance (UPA) government even before they were formally tabled in Parliament during its current session. Several factors had contributed to this. These included leaked contents of the reports that circulated in the media and in political circles; murmurs that emerged on the basis of these leaks, primarily from the principal opposition Bharatiya Janata Party (BJP); and the relatively long duration for which the reports remained in the office of President Pratibha Patil before they were sent to Parliament. (The report was sent to Parliament on the last day of Pratibha Patil’s tenure.) Moreover, the general characteristics of CAG reports in the past four years, marked as they were by the exposure of wrongdoings by the administration, including massive corruption as in the case of the 2G spectrum allocation and stinging criticisms of government policy, added to this sense of anticipation.

    Indeed, when the reports were finally tabled in Parliament during the monsoon session, they did live up to the expectations of causing problems for the UPA, particularly its leading partner, the Congress. The impact of the reports did not stop with that. It has developed in such manner that questions have been raised about the very role of Parliament in India’s democracy. The Prime Minister himself has gone ahead and criticised an institution like the CAG. He termed the CAG report on coal block allocations as “flawed and disputable”. Other leaders of the Congress, including its spokespersons, have even questioned the probity of the CAG’s office. In the process, the role of both the government and the principal opposition in facilitating democratic functioning of Parliament as well as in preventing or curbing corruption has also been brought into question.

    The reason why the report on the allocation of coal blocks is at the centre of the political storm is not far to seek. It is different from the other two reports, as well as the many other controversial reports that have come out in the last five years. The major difference is that it has brought the role of Prime Minister Manmohan Singh himself into question.

    Admittedly, Manmohan Singh was in charge of the Coal Ministry when some of the controversial allocations took place, and the BJP lost no time in demanding his resignation on account of this. It persisted with this demand and disrupted the functioning of Parliament day after day even though the Congress leadership, including the Prime Minister, offered to have a thorough debate in Parliament on the report.

    Even after its allies in the National Democratic Alliance (NDA), including the Janata Dal (United), chose not to join its rambunctious protests, the BJP continued with them. It is in this context that the role and motive of the principal opposition, too, has come into question.

    Commenting on the developments in Parliament, Sitaram Yechury, the Polit Bureau member of the Communist Party of India (Marxist) and Rajya Sabha member, said: “Both the government and the principal opposition seem to be indulging in a game of political match-fixing on this issue. The government cannot shy away from the responsibility of ensuring the functioning of Parliament. And the opposition needs to be ready for a debate in Parliament. This seems to be an issue where both sides have much to hide, and hence the recourse to disruptive tactics on the one side and the studied drift on the other, leading to the collapse of the functioning of Parliament.”

    Yechury’s contention has many takers in both the ruling and opposition coalitions. Leaders of parties such as the Nationalist Congress Party (NCP) in the UPA and the JD(U) admit in private that a thorough debate on the issue could expose both the mainstream parties. As far as the Congress is concerned, even that would help it score some political points, especially because it is pushed to the wall in the context of the reports.

    Speaking to Frontline, Congress spokesperson Manish Tiwari underscored this line of thinking. He pointed out that all governments of the BJP, whether at the Centre or in the States, had followed the very same procedures for coal allocation now criticised in the CAG report. “The BJP now upholds the case that in the absence of competitive bidding the allocation of coal blocks to private parties was conducted through non-transparent procedures which caused mota maal [big time] gains to private companies. But the BJP had also followed the non-auction route when it was in power at the Centre. In States where the party is in power, its governments follow the same path. So, clearly, this is a game plan with a motive. One must remember the experience of a former CAG, who became the BJP’s Rajya Sabha member soon after he left office. If nothing else, the CAG’s style underscores a lack of due diligence. No right-thinking person will question Manmohan Singh’s commitment to probity in public life,” Tiwari said.


CHAIRMAN OF POWER Finance Corporation V.K. Garg, Deputy Chairman of Planning Commission Montek Singh Ahluwalia, Minister for Power Sushil Kumar Shinde, and chairman of Reliance Energy Anil Ambani at the handing over ceremony of the 4,000 MW Sasan Ultra-Mega Power Project to Reliance Power Limited.

    A dominant section of the BJP’s leadership is of the view that the party need not get drawn into such “objective debates” on the principles of coal allocation or on the need for democratic functioning of Parliament at this point of time. This section considers that the “coalgate” could be built up in much the same way as the Bofors howitzer scandal in the 1980s, when a corruption charge against Prime Minister Rajiv Gandhi became the biggest election issue.

    “The government is already on a stretcher and this allegation against the Prime Minister could deal more crippling blows to it,” a senior BJP leader told Frontline. The reaction of Arun Jaitley, Leader of the Opposition in the Rajya Sabha, to the reservations expressed by the NDA constituents on the BJP’s strategy on the issue clearly points to this aggressive thrust of the party. “It is being said that the BJP is isolated on this issue. If it is so, we see this as magnificent isolation,” Jaitley told the media.

    In the middle of all this, officers associated with the auditing agencies lament the attribution of political motives to audit reports, and the campaign and criticism of auditing officers on the basis of political considerations. They point out that political issues and manoeuvres have come up with attention-grabbing audit reports right from the first government of India. They point out that the audit probe angle was prominent right from the Jeep scandal of 1948 to the Mundhra case to the Bofors howitzer scam of the 1980s.

    “It is true that in recent years, these reports have captured greater public attention, essentially on account of the rapid growth of media coverage. But the central factor that motivates people’s attention is that everybody is concerned with the loss of natural resources. When an audit report highlights that, large sections of the people do show their concern in various ways; blaming an officer or the CAG for this is certainly not in order. There is, indeed, need for a more balanced approach to such issues,” Amitabh Upadhyaya, former Director General in the CAG office, told Frontline.

    It remains to be seen how far the two mainstream parties and the other political players will accept this plea for a balanced approach. What is clear, however, is that the three recent CAG reports have prevented effective functioning of Parliament in the monsoon session. And there can be little doubt that the coalgate battle will move to Parliament’s Public Accounts Committee (PAC) once the session ends. And that will unleash a different sort of rambunctiousness within the political system.

Courtesy: The Frontline

‘OCCUPY WALL STREET’ PROTESTS

October 19, 2011

 

Growing Anger Against Capitalist Crisis

Sitaram Yechury

sitaram2

    AT the recently-concluded summit of India, Brazil and South Africa (IBSA) held at Johannesburg, South Africa, prime minister Manmohan Singh has called upon the developed countries to “take steps to avoid hard landing of global economy”. This call comes a fortnight before the leaders of G-20 are to meet at Cannes, France.

    Before departing for the summit, the prime minister held high level consultations with the managers and advisors of the Indian economy expressing deep anxiety on tackling Indian economy’s twin problems of soaring inflation and sharply declining industrial growth rate.

    Both the PM’s call to the developed nations and the prescription to be adopted for the Indian economy reflect the fact that India under the leadership of the UPA-II government continues to look for solutions within the framework of neo-liberal economic reforms. These, as we shall see later, will only deepen the misery of the vast mass of the Indian people.

    Importantly, these expressions of the Indian prime minister show that he is completely oblivious, as many leaders of the global economy have ‘chosen’ to be, of the growing global anti-‘Wall Street’ protests. These are sweeping across the world from Australia through Asia, Europe and, of course, to the Americas. Over 1500 protest actions took place all over the world on the ‘global day of action’ in 82 countries. The `Occupy Wall Street’ movement began on September 17, 2011 in Liberty Square in New York Manhattan’s financial district and has now spread to over 100 cities in the USA. The rallying point of all these actions was the focus against `corporate greed’ as the cause of the current global capitalist crisis that is threatening to slide into a double-dip recession.

    While, on the one hand, protestors in Boston outside the Bank of America building carried screaming headlines declaring `class war’, the rightwing Republican Party has raised the alarm that these protests are, indeed, a `class war’.

    Since the global recession began, reportedly the sale of Karl Marx’s Das Kapital have soared. Even the venerable Pope, reports suggest, has ordered copies for the Vatican. During the anti-Vietnam war protests, in the same city of Boston, university campuses had posters saying: “if you want to make the grade, then you have to be good at Mar(x)ks”.

    Those falling back on Karl Marx’s seminal work Das Kapital to understand the functioning of the capitalist system and the genesis of its crises will do well to read the concluding chapter of Volume I. “Capital comes dripping from head to foot, from every pore, with blood and dirt”. He buttresses this with a quote, in a footnote, from a worker T J Dunning: “With adequate profit, capital is very bold. A certain 10 per cent will ensure its employment anywhere; 20 per cent will produce eagerness; 50 per cent, positive audacity; 100 per cent will make it ready to trample on all human laws; 300 per cent and there is not a crime at which it will scruple, nor a risk it will run, even to the chance of its owner being hanged.”

    It is this pathological drive to maximise profits at any cost, the inherent character of the capitalist system and not the individual greed of some or weakness of regulatory mechanisms that is the root cause for the present crisis.

    Greed is but a euphemism, one amongst many others, for profit maximisation, the raison d’etre of the capitalist system. The myth that greed is something alien to capitalism and, hence, can be kept under check is, once again, exploded. Capitalism has greed as its inseparable companion. It is the system and not the avaricious attributes of individual capitalists that is the culprit.

    Another consciously engendered myth that the State under capitalism is a benign neutral entity has been shattered. True to its character, the capitalist State intervened to bailout those very financial giants who, in the first place, caused the current crisis. The Special Inspector General for the US government’s financial bailout programmes says, “Since the onset of the financial crisis in 2007, the federal government, through many agencies, has implemented dozens of programmes that are broadly designed to support the economy and the financial system. The total potential federal government support could reach up to $ 23.7 trillion.” Compare this with USA’s GDP which is just over $ 14 trillion. The US treasury spokesman, however, denies the veracity of this figure.

    Similarly, there have been large-scale borrowings by the governments of several developed countries to finance such bailouts. Corporate insolvencies have thus been converted into sovereign insolvencies. In order to meet this debt burden, the EU is today in convulsions with governments like Greece, now Spain more likely to follow, adopting severe `austerity’ measures, meaning, drastic cuts in social benefits and expenditures for the working people. General strikes and protests have become the order of the day.

    The impact of the crisis has been severe. One in six US citizens are living in poverty, according to new census data. The US Census Bureau reported that average household incomes dropped and the poverty rate increased for the third year in a row. The official unemployment rate is currently 9.1 per cent, meaning 14 million US citizens are out of work. And the overall poverty rate climbed to 15.1 per cent in 2010, or 46.2 million, up from 14.3 per cent in 2009. The poverty line is set at an annual income of $22,300 for a family of four. Real median household income declined by 6.4 per cent to $49,445 between 2007 and 2010.

    The income drop for black people was a  whopping 15 per cent compared with a 7.1 per cent average. The unemployment rate for African-Americans is currently 16.7 per cent. Reflecting the impact of the recession, the US poverty rate from 2007-10 rose faster than any three-year period since the early 1980s, when a crippling energy crisis and neoliberal government cuts contributed to inflation, spiraling interest rates and soaring unemployment. The total number of people living in poverty — over 46 million — is the highest in numerical terms since the census began tracking it in 1959. As a proportion of the population it ties with the 1993 poverty level for the highest since 1983. The income share of the country’s top 1 per cent is hovering around 20 per cent, up from about 8 per cent in the 1970s.

    Further, new US census data analysed by the Pew Research Centre shows that the recession wreaked havoc on the wealth of all Americans but that whites lost the least amount as a percentage of their holdings. Between 2005 and 2009, the median net worth of Hispanic households dropped by 66 per cent and that of black households fell by 53 per cent. In contrast, the median net worth of white households dropped by only 16 per cent. The median net worth of a white family now stands at 20 times that of a black family and 18 times that of a Hispanic family — roughly twice the gap that existed before the recession and the biggest gap since data began being collected in 1984.

    The recession also has slashed the wealth of Asian American households, which in 2005 had higher median wealth than white families but by 2009 had less. Their median wealth figure dropped by 54 per cent. Between 2005 and 2009, the share of wealth owned by the wealthiest 10 per cent of all households rose to 56 per cent from 49 per cent. The share of Americans with no wealth at all rose sharply during the recession. A third of Hispanics had zero or negative net worth in 2009, up from 23 per cent in 2005. For blacks, the portion rose to 35 per cent from 29 per cent, and for whites, it rose to 15 per cent from 11 per cent. For years, statistics have depicted growing income disparity in the United States, and it has reached levels not seen since the Great Depression.

    On the other hand, what is the situation of the financial giants on the Wall Street that in the first place triggered this crisis? The Bank of America, having then acquired the ‘bankrupt’ Merrill Lynch has earned $ 3.7 billion in the first half of 2011. Goldman Sachs set aside $ 5.23 billion as bonuses to its executives. The bank reported net additional revenues of $ 11.89 billion and net earnings of $ 2.7 billion for the first quarter.

    In this context, the PM’s concerns noted above, indeed, appear natural. But what are the prescriptions that are being offered to us in India? While headline inflation stood at 9.72 per cent in September, food, fuel and consumer goods grew costlier than this. On the other hand, the index of industrial production fell to a dismal 4.1 per cent. Global recession has seen exports falling from 82 to 36 per cent between July-September. Imports fell likewise indicating a sluggish domestic demand. This has widened our trade deficit to an unprecedented $ 73.5 billion.

    Investors are complaining that the RBI’s measures to control inflation has pushed the cost of credit, leading, in turn, to declining investment. The presumption is that if cost of capital is cheap, then investment will rise leading to higher growth.

    The fallacy lies in the fact that what is produced through higher investments needs to be sold which requires purchasing power in the hands of the people. With this drastically declining globally and in our country, the neo-liberal prescription simply cannot work. It is only a veil to camouflage the earning of higher speculative profits utilising cheap credit. This is reflected in the global trends where the same financial corporates that triggered this recession increased speculative trading by increasing the amount of derivatives on their books by $ 11.3 trillion in the third quarter from the first quarter. The main culprits of the current recession, J P Morgan Chase, Citigroup, Bank of America and Goldman Sachs account for about 90 per cent of the activity in derivatives or speculative trading.

    Keynesian State intervention was one possible way in which such naked pursuit of profit maximisation could have been muted. Keynesianism far from being the palliative to provide relief to the people was structurally designed to stabilise the capitalist system from its inherent tendencies of plunging into recurrent crises. Under the neo-liberal dispensation, however, State intervention comes to the rescue of corporates at the expense of the people, further destabilising the system.

    In the Indian context, as noted repeatedly in these columns, our economic fundamentals can only be strengthened and stabilised when interventions are designed to expand the purchasing power of our people, thus, enlarging aggregate domestic demand. This, in turn, would set in motion a trajectory of sustainable growth.

    The PM and his advisors could do well to reconsider and reverse the trend of providing over Rs 5 lakh crores as tax concessions to the rich, as revealed in the last two budget documents.

    These monies, if instead, were invested in public work projects, this would have built the much-needed infrastructure while generating large-scale employment and, thus, vastly enlarging people’s purchasing power.

    The choice can still be made. The UPA-II government must be made to make this choice through mounting popular pressures backed by mighty protest actions.

Global Financial Turbulence: India Must Draw Proper Lessons

August 11, 2011

Sitaram Yechury

THE turbulence that has gripped the world’s financial markets has, once again, sharply illustrated the fact that global capitalism, a system based on the exploitation of man by man and nation by nation, can never be crisis free. However, as repeatedly underlined in these columns, irrespective of the intensity of the crisis, capitalism never collapses on its own. It needs to be overthrown. This requires the strength of the working class leading all exploiting classes through the sharpening of class struggle to lead the revolutionary transformation to overthrow capitalism. In the meanwhile, capitalism emerges from its self-created crisis by further intensifying exploitation. This is precisely what is happening today.

    Following the unprecedented downgrading of US sovereign long term credit rating by Standard & Poor from AAA level, the world stock exchanges went into a tailspin. In the US, the Dow Jones industrial average fell by 634 points or 5.6 per cent. The Nikkei in Tokyo was down 3.7 per cent while the Kospi in Seoul fell 6.2 per cent. Australia saw a fall of 2.9 per cent. The German index, the Dax, dropped 5 per cent and has lost 21 per cent of its value since May this year. Reflecting this, major banks saw the biggest declines in their stocks. Bank of America fell by 20 per cent, Citi Group fell by 16 per cent, Morgan Stanley dropped by 14 per cent, J P Morgan fell by 9 per cent and Goldman Sachs fell by 6 per cent. The Standard & Poor’s 500 stock index has lost 16.8 per cent in the last three weeks. Some stock exchanges, including our sensex, have, since, shown some improvement. This, however, may only be transitory and, in any case, such fluctuations are the reflection of the current turbulence.

    These developments have virtually generated panic with the London Economist predicting a double-dip global recession led by the USA. Last week alone saw $ 2.5 trillion wiped off from investor’s wealth. The sensex in India lost over Rs. 4 lakh crores in the last four trading sessions. The simultaneous sovereign credit crisis in the Eurozone has seen the virtual insolvency of Greece, Ireland and Portugal, who had to be bailed out by huge packages. The crisis is now threatening Spain and Italy and is unlikely to stop there.

    However, it will be wrong to characterise these developments as a new phase of the global economic crisis. In a sense this is a continuation of the financial crisis that began in 2007 leading up to a recession. This was only to be expected given the manner in which global capitalism sought to overcome the crisis that began in 2007.

    By undertaking huge and unprecedented bailout packages for those very corporates who, in the first place, caused the financial meltdown, developed countries incurred huge amounts of debts surpassing their GDPs. Global capitalism sought to overcome the crisis by converting corporate insolvencies into sovereign insolvencies. This, in turn, has intensified the crisis today plunging the world economy into a state of uncertainty.

    The Special Inspector General for the US government’s financial bailout programmes, created to serve as an auditor of the federal bailout, in a prepared testimony delivered to the US Congress House oversight committee says, “Since the onset of the financial crisis in 2007, the federal government, through many agencies, has implemented dozens of programmes that are broadly designed to support the economy and the financial system. The total potential federal government support could reach upto $ 23.7 trillion.” Compare this with USA’s GDP which is just over $ 14 trillion. The US treasury spokesman, however, denies the veracity of this figure.

    The truth, however, is that as of May 16 this year, the total US debt was pegged at $ 14.3 trillion. Now (as noted in Prabhat Patnaik’s article last week) the USA has an anachronistic law, adopted in 1917 that puts a ceiling on the magnitude of debt in absolute terms. This is unlike in Europe or in India where the size of the fiscal deficit (different from debt) is fixed as a percentage of the GDP. This ceiling, however, was routinely revised upwards in US history. Given the current debt crisis, it was presumed that the tradition of this routine will continue. However, this was not to be.

    The Republicans whose concurrence was essential to raise the ceiling demanded their pound of flesh. While insisting that the tax benefits for the rich that began during the George Bush era be continued, the Republicans put a condition for agreeing to increase the debt ceiling only if severe cuts were effected in expenditures that were essentially aimed at benefiting the poor and the needy such as Medicare.

    Similar is the logic of the sovereign bailout packages offered by the IMF and the EU in the Eurozone. Countries like Greece had to undertake massive `austerity measures’ to cut expenditures. This has imposed an unprecedented burden on the working people, whose remunerations, amongst others, have been drastically cut. During the last two years, the popular protests in Greece have seen 17 general strikes nationwide. Germany, widely seen as the economic powerhouse of the European Union and expected to pull other Eurozone countries out of crisis is itself showing signs of an economic slowdown. Its index of manufacturing activity dropped to 52 in July, the lowest level since October 2009. This is the third consecutive month of decline. Analysts have said that the main source of worry for Germany is that the “sources of domestic demand are not manifesting itself”.

    In other words, what is happening is the following: The capitalist State mobilises resources for huge bailout packages. In the process, it accumulates massive sovereign debt. The burden of this debt is transferred on to the shoulders of the working people through massive cuts in welfare and social security expenditures. This is the logic of capitalism, pure and simple: maximize profits by intensifying exploitation.

    In the USA, data from 2009 corporate tax returns shows that the estimates of corporate profits grew from 8.3 per cent to 10.8 per cent in 2010. Corporate profits accounted for 14 per cent of the total national income in 2010, the highest ever recorded. Corporate profits have been expanding for the last ten consecutive quarters. In the process, all corporates have accumulated mind boggling cash reserves. Apple alone has cash reserves of $ 72 billion, more than the GDP of half the countries in world. Microsoft and Google together have cash reserves of more than $ 100 billion. Similar is the story with other corporates. At the other end of the spectrum, USA has today an unprecedented unemployment rate of close to 10 per cent.

    This situation is not confined only to turbulence in global finance. It has laid the seeds of a more fundamental crisis. As the burden of sovereign debt is passed on to the common people, their purchasing power correspondingly declines. Combined with the growth of unemployment, this leads to a sharp contraction in domestic demand. Further, this global crisis has drastically reduced global trade. Germany, for instance, saw its exports fall sharply in June to a growth rate of only 3.1 per cent compared to 20.1 per cent in May. Under such circumstances, the manner in which the USA has handled its debt ceiling issue impacts not only its domestic economy but the global economy. With the contraction of domestic demand in all the major economic powers, save China, the contraction of GDP in all these countries is inevitable. This, in turn, will lead to a further contraction in governmental revenues, imposing further debt. The servicing of this would lead to imposing further burdens on the people. This vicious cycle has been set in motion, imposing unprecedented burdens and misery on the people. This would lead to many ugly manifestations of social tension like the spreading riots of loot in the UK.

    For us in India, it is important to draw the correct lessons. Clearly, what is required is to boost domestic demand as a means for achieving not only substantial growth but also arresting the growing economic inequalities. This would mean that the process of foregoing legitimate tax revenues in the name of stimulus packages must be reversed. During the last two years, over Rs 9.5 lakh crores was, thus, foregone according to the budget papers. Instead, these huge amounts should be collected and utilised for massive public investments to build our much-needed infrastructure. This will generate high levels of employment and bolster domestic demand fuelling a sustainable growth trajectory.

    Further, given the global financial turbulence, India must not be foolhardy to rush into `Gen next’ financial reforms. In the first place, if India could protect itself from the devastating effects of the global meltdown in 2008, it was because the Left parties had prevailed upon UPA-I not to proceed with such financial reforms that were waiting to be legislated. Such wisdom must prevail to protect the Indian economy and people from being devastated by this global turbulence.

AFTER TWENTY YEARS OF REFORMS IN INDIA

July 31, 2011

Sitaram Yechury

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Shun Neo-Liberal Trajectory

    THE tenacity of the cheer leaders of neo-liberalism is simply amazing. They simply refuse to learn from their own experiences. Using the occasion of the 20th anniversary of the then finance minister Dr Manmohan Singh’s presentation of his first budget (July 24, 1991), they are now clamouring for further reforms particularly financial liberalisation. They seem to forget, in fact deliberately ignore, the fact that but for the Left parties which prevented UPA-I government from going ahead with such reforms like, privatisation of pension funds; increasing the FDI cap in the insurance sector; banking reforms permitting greater role for foreign banks and the full convertibility of the rupee; India would have been severely devastated by the global financial crisis and recession.

    Returning to the much-celebrated budget speech, it should be realised that it alone was not the harbinger of the neo-liberal economic policy trajectory. The Indian rupee was devalued twice on the very eve of this budget. Rajiv Gandhi’s call to take India into the 21st century led to a huge profligacy in imports which, in the main, resulted in the foreign exchange reserve crisis, the pretext for ushering in reforms. This is testified by the fact that in the four years from 1985 to 1989, the over 350 Indian corporates earmarked for export promotion had registered a net loss of Rs 5,751 crores of foreign exchange. This quantum jump in imports led to a sharp rise in India’s foreign borrowing. Between 1984 and 1991, our foreign debt rose from Rs 28,000 crore to Rs 1,00,425 crore.

    Two decades later, in complete contrast to this euphoria, one thing is certain. We have succeeded in creating two Indias. If the quality of life of everybody had substantially improved, then growing income inequalities would be seen as an index of relative poverty and not absolute poverty. However, given the widespread agrarian distress, the suicides by our farmers, drastic reduction in the per capita availability of food grains and pulses – all go to show the rise of absolute poverty among certain sections of our people. The luminosity of `shining India’ is, therefore, directly proportional with the depravation of `suffering India’.

    The liberalisation pundits must note that the IMF, the international agent of neo-liberalism, had conducted a study in 2010 ironically titled, “India is the rising tide lifting all boats”. This paper measures the universally accepted index of income inequality – the Gini coefficient (the Gini coefficient is a number between 0 and 1, where 0 corresponds with perfect equality). It shows that this has risen from 0.303 to 0.325 for the country as a whole in the first decade of the 21st century. In the urban areas, the situation is much worse with the gini coefficient rising from 0.343 to 0.378. There cannot be a greater indictment than this which demonstrates the growing hiatus between the two Indias.

    While Dr Manmohan Singh continues to be hailed, unfortunately, due credit is seldom given to the then prime minister, P V Narasimha Rao who chose the finance minister in the first place. In fact, as his government entered its last year, P V Narasimha Rao, in a candid admission, said that the reform process does not guarantee to the people basic `rights to food, work, shelter, education, health and information through national determination’. Speaking at the World Summit for Social Development in Copenhagen in March 1995, he said: “Today, the world stands at the cross-roads of history even as it struggles to free itself from the attitudes of the Cold War era. We are at the cross-roads because we know that certain paradigms of development which placed the State alone at the centre did not succeed.

    There is now a swing to the other side, namely the tendency to put an untrammelled Market alone at the centre. While the new enthusiasm sweeps over the countries, one cannot help the uneasy feeling that what is needed really is a certain Market Plus; otherwise, the poor and the weak are likely to suffer exclusion due to the imperfections of the Market. The inadequacy in both these approaches stems from the failure to place the people at the centre. This centrality of the people is extremely important. We have to empower the people themselves as the central strategy to social and economic development to sustain human progress.”

    Further, the then PM says with reference to India, “The core issues of poverty eradication and social integration cannot be addressed credibly without adequate resources, non-discriminatory access to markets and the availability of technologies that are relevant to these core issues. At the national level, countries have to commit the resources required to realise the rights for the poor in terms of institution building, formulation of policies, designing of strategies and above all, mechanisms of monitoring and evaluation that make implementation sustainable.

    The rights I have just mentioned are fundamental to development in its broadest sense. They act as a corrective to the distortions of the State and the Market severally and also complement the efforts and achievements of both. It is this harmony that we would seek to develop in the context of the reforms that we have embarked upon presently in our own country, as a means to our goal of eradication of poverty.”

    Is it possible to achieve such economic and social empowerment of the people under the neo-liberal dispensation? The elusive objective of `inclusive growth’ can only be achieved if there is a radical departure from such a trajectory. It is precisely this that P V Narasimha Rao refused to accept thereby confirming that such concerns were mere platitudes, to mislead the people, on the eve of the 1996 general elections.

    However, if such objectives need to be achieved, then this requires a new set of reforms which will provide food security, health and education for our people. It also requires the need to protect our people from increased dispossession, like it has happened with the process of land acquisition all across the country. One of the hallmarks of neo-liberalism is the pressing open of newer avenues for capital accumulation. One such is the acquisition of land from the farmers at throwaway prices for super profits. Such “accumulation by dispossession”, as an American intellectual defines, is nothing new in the history of capitalist development. Recollect that, during the 19th century industrial revolution, over 50 million of such dispossessed people from Europe moved to the then `free world’ (USA, Australia etc.)

    Today’s dispossessed have no such avenues and are thus condemned to misery. The Left has been seeking a new land acquisition law to replace the anachronistic 1894 law that is today in force. This law must ensure that apart from adequate compensation and future employment, that the former owners also have a share in the rise in the value of the land post acquisition. Further, these people must be protected by law to defend themselves against land and real estate mafias that would force them to part land at throwaway prices.

    The constant refrain by the government, however, is that we have insufficient resources to implement a comprehensive food security legislation or to realise in practice the Right to Education law. This sounds not only absurd but is a patent falsification given the mega scams that this very neo-liberal trajectory has facilitated. There is no dearth of resources in our country. There is a dearth of political will to take on the corrupt politician-bureaucrat-businessmen-corporate media nexus that is looting these resources.

    Instead of focusing on such reforms, that will go to some extent in providing a better livelihood for our people, there is a clamour today for what is fashionably termed as `gen next’ reforms. Permit 100 per cent foreign investment in retail trade, for instance. This would spell ruin to crores of Indian people who are today engaged in such trade. Far from the socio-economic empowerment that we have been speaking of, such reforms will only lead to greater deprivation.

    What is required, therefore, is to mount popular pressure on the present UPA-II government to make a radical break from this neo-liberal trajectory. This is essential to ensure that the Indian people can realise their true potential which is today being denied by such policies that promote inequalities sharply and the loot of our country’s resources.

Budget, 2011 pampers the rich and burdens consumers: Sitaram Yechury

March 1, 2011

 

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This budget neither addresses the basic issues confronting the aam aadmi like price rise, corruption and black money, nor promotes inclusive growth. The finance minister says inflation is due to ‘shortcomings in distribution and marketing systems’. There is no effort to roll back the last Budget’s hikes in petroleum duties. There is no reference to prohibiting huge speculative trading in the commodity exchanges. Nor is there is any reference to releasing from central godowns food stocks that are more than double the buffer norm. Any, if not all, of these measures would have eased the pressure on prices.

    On the contrary, the burden on the people will increase. Major subsides on fuel, fertiliser and food have been cut by over Rs 20,000 crore, compared to the 2010-11 Revised estimates (RE). The budgetary support for the central Plan goes up by only 12%, trailing nominal GDP growth of 14%. This squeeze in real expenditure is reflected in decreased allocations for agriculture and rural development compared to last year’s RE. Total non-Plan expenditure is also lower than the RE with major reduction in economic services that include agriculture, industry, power, transport, etc, and social services that include education, health, etc.

    There is a relief of Rs 11,500 crore in direct taxes, a subsidy to the rich, while there is an additional mobilisation of Rs 11,300 crore through indirect taxes, a burden on the consumers. This comes on top of the total tax concessions given last year amounting to over Rs 5,11,630 crore. Conceding for a moment the concessions in excise and Customs duties were meant to be a stimulus, the concessions in corporate and personal income tax amounted to Rs 1,38,921 crore. This is an additional subsidy to the rich during last year. This Budget, therefore, continues with the philosophy that subsidies to the rich are  incentives for growth while those to the poor are detrimental.

    In this background, the proposal to target fuel and fertiliser subsidies through direct cash transfers, apart from excluding large sections of the needy, will adversely impact upon the deepening agrarian crisis.

    On tackling corruption, the finance minister typically announced the constitution of a group of ministers! With regard to black money, we are informed that the ‘government has put into operation a five-fold strategy that consists of joining the global crusade against black money’! No concrete measures such as reviewing the double taxation avoidance agreement with Mauritius, through which 42% of foreign capital inflows to India are routed. Such channels are the biggest conduits for tax evasion and money laundering.
 

    That such measures are being shirked in order to propitiate international finance capital at the expense of siphoning off huge amounts of our resources becomes apparent with the announcement of moving forward with financial liberalisation, for which seven laws in the financial sector have been announced. It is precisely because the Left prevented UPA-I from undertaking such measures that India could withstand the devastating impact of the global recession. With the now-declared desire to appease international finance capital, India is being rendered vulnerable to global speculative shocks, particularly with India’s current account deficit widening.

    During the last three years, corporate and personal income tax concessions, according to the budgetary Statement of Revenue Foregone, amounts to a whopping Rs 3,61,415 crore. If this revenue were collected and utilised for public investments, we would have been able to build our much-needed infrastructure and generate employment. This, in turn, would have substantially enlarged domestic demand laying the basis for a healthy, sustainable growth trajectory.

    Instead, the divide between the two Indias is only being widened. Ironically, all in the name of the aam aadmi!

    In sum, this Budget will only aggravate the widening economic inequalities taking India further away from inclusive growth, while weakening its economic fundamentals.

Courtesy: The Economic Times