Communist Party of India (CPI) parliamentary group leader and CPI National Council secretary Gurudas Das Gupta has said that the UPA-II government has miserably failed over the years to stimulate inclusive growth and rather did not succeed even to maintain the rate of GDP growth attained earlier, which is today at an all-time low of 5.3 per cent. It could not even hold the price line mainly of the essential commodities including food articles.
The veteran parliamentarian, also the AITUC general secretary, made these observations in his dissent note on the report of the parliamentary standing committee on finance concerning the present economic situation, submitted on August 29, 2012.
Unfortunately, the standing committee’s draft report as prepared failed to critically examine the fundamentals of the economic policy and suggest effective alternatives instead objectively approved the policy that has been pursued by the government, he said. “It does not even refer to the futility of the policies and non-performance of the government. In my view, the committee did not discharge its responsibility by patting on the back of the government.”
Saying that the present crisis cannot be attributed solely to the international crisis, second in two years, Dasgupta said that the present policy of unguarded liberalisation, reckless privatisation, unusual dependence on foreign funds, over dependence on export market, failure to curb speculation in a situation of scarcity, its total inability to provide economic empowerment to a vast section of the majority of the people, galloping disparity of income and increasing unprecedented concentration of wealth in the hands of the few form the basic negative feature that has been overlooked by the committee.
The report speaks of “economic incentive regime for accelerating and sustaining growth.” It also states that “the committee, hence recommend that the FDI policy may be reviewed by the government to ensure the above and make India an increasingly attractive and investor-friendly destination for foreign investors.” It further says: “Our policies should attract more long-term capital inflows and push investments through reforms.”
Thus, the CPI group leader pointed out that the observations clearly approve the government of India’s FDI-friendly policy of economic reform, spelling out the undeniable message that it is the foreign investment that will engineer the process of accelerated economic growth obviously taking care of the basic human problems. “This proposition has not been found to be correct anywhere in the world. The committee rejecting all the Indian realities, by implication seeks to strengthen the hands of the government to bulldoze its people-unfriendly economic reform. The report will give a free hand to the government to allow FDI in the retail trade, further tax concession to the corporates in the SEZs, it will lead to more violation of labour laws and enable the government to infuse FDI in the banking and insurance having proportionate voting rights. In the name of attracting foreign funds it will bestow more concessions undermining the national interest, making India the most attractive hunting ground for the international players looking for unlimited profits exploiting national resources and manpower.”
Stating that primarily the growth of the economy depends on national resources augmenting progressive tax revenue, broadening the tax base, reducing the tax concession, holding up tax avoidance, by waging all out war to retrieve black money, curbing unaccounted income, effectively fighting corruption and reducing wasteful expenditure and relocating priorities in the process of budget making, he said that nobody is denying the role of FDI in national development, which by all means is subsidiary.
The direction of the report, which is extremely flawed is stereotyped and does not search for alternative policy which the nation is looking for. There is no word for stimulating the domestic market, enlarging the empowerment of the marginalised majority.
The report in the background of the agricultural crisis does not call for heavy public investment in agriculture, only asks for ‘infusion of funds’ without indentifying the source of funds. While investment in agriculture has been dwindling down over years, both public and private, the report does not “look beyond the nose, makes a superfluous comment on the need of infusion of funds, which is unlikely to happen.”
“Nevertheless it is correct to say that private investment has a crucial role in a mixed economy like India. But in a situation of gloom and downturn, it is massive government investment targeted to augment the income of the common people, for creating job, ensuring stability of income of the disadvantaged, even incurring budget deficit can turn around the economy. Heavy government investment will stimulate the market, generate the income, improve aggregate demand and as a result market shall look up creating the atmosphere for the inflow of profit oriented private investment, even draw foreign funds. Unfortunately, the alternative perception is ignored and discarded by the Report and in fact it strengthens the hands of the government to carry forward the present anti-people economic policies”, the dissent note adds.
Criticising the government for recommending the sale of family silver to meet the grocer’s bill, he said that the report suggests disinvestment for raising revenue, when the market sentiment is so negative. “The Committee unfortunately goes so far as to suggest 10 per cent reduction in the non-plan expenditure which essentially suggests to reduce subsidy obviously hurting the common people. This is quite in line with what the present government wants to do. In the name of quoting RBI, the report puts on record with concern the question of overshooting of subsidies.”
The committee, he says, “even refers to with concern the impact of ‘retrospective tax laws’ and ‘general anti-tax avoidance rules’. It calls upon the Government to modify/withdrawal these laws so that investors’ interest is not hurt. It calls upon the government for the speedy enactment of the financial reform Bill including Pension Fund Regulatory and Development Authority Bill, the Companies Law Amendment Bill. The report undoubtedly shall be a feather in the cap of Dr Manmohan Singh’s government.”
The report in the name of strengthening the health of the banks “seeks to permit the government for going for merger of the banks undermining the national interest. It also opens the door for private investment in banks diluting its public sector character.”
Since the report is one sided, seeks to strengthen the hand of the government in pushing through all its corporate friendly reform programme at the cost of the interest of the people, since the report does not locate the fundamental anachronism in the economic policy that has led to a situation of slowdown and food inflation, almost taking the country to the threshold stagflation, since the report is in fact an apology for the inaction of the government and since the report does not find any fundamental flaw in the policy and refrains from outlining people friendly suggestions Dasgupta made it clear that he has no other alternative but to put on record his dissent. “It is unfortunate that the report is likely to serve as a readymade weapon in the hand of the government to defend its failed economic policy running the country.”